Multinational Enterprises Research Articles

Exploring the role of organizational identification in the nexus of psychological capital and organizational-oriented citizenship behaviors: evidence from healthcare professionals in India.

The purpose of this study is to explore the mediation of organizational identification (OI) in the relationship between employees' psychological capital (PsyCap) and their engagement in organizational-oriented citizenship behaviors (OCBO). We examine the proposed theoretical model through the lens of the job demand and resources (JD-R) model and social identity theory (SIT), focusing specifically on the healthcare setting. Employing a structured questionnaire, responses were collected from 240 healthcare professionals working in multinational pharmacovigilance firms in select Tier-I Indian cities using purposive sampling. Model testing constituted performing statistical analyses using partial least squares-structural equation modelling (PLS-SEM) in the R environment, an open-source software. Results revealed a significant positive association between PsyCap and OCBO. In addition, we found that OI mediated the relationship between PsyCap and OCBO. This suggests that practitioners can stimulate extra-role performance in employees through enhancing PsyCap and fostering psychological oneness with the organization. The research emphasizes the significant role of employees' personal resources, manifested in the form of PsyCap, in having a bearing on their attitudes and feelings towards the organization. We explore the under-researched latent mechanism of the PsyCap and OCBO relationship through employees' social identification process. In this research, we uncover the underlying mechanism of PsyCap and OCBO association by highlighting the latent role of OI on a unique set of healthcare professionals.

The EU’s Corporate Sustainability Due Diligence Directive: From Disclosure to Mandatory Prevention of Adverse Sustainability Impacts in Supply Chains

Abstract This article discusses the EU supply chain legislation, by virtue of the recently adopted Corporate Sustainability Due Diligence Directive (CSDDD) which aims to reduce negative sustainability impacts in global supply chains with regard to a list of human rights and environmental standards specified in its Annex I of the CSDDD. We argue that the CSDDD marks a fundamental change on the EU level, from disclosure duties to mandating prevention of, and compensation for, adverse sustainability impacts in supply chains. We further find that the CSDDD is a legal transplant combining the principles laid down in the OECD Guidelines for Multinational Enterprises on Responsible Business and those of the UN Guiding Principles on Business and Human Rights, along with elements of French supply chain legislation from 2017 (which relies on a private enforcement model) and the German supply chain law from 2021 (which is based on a public enforcement model). Like all legal transplants, the resulting legal text generally prompts questions about consistency and specifically raises doubts as to whether combining all of the components of a private and a public enforcement model is proportionate for the purpose of the CSDDD which is to ensure that companies take effective steps to counter violations of human rights and environmental standards in global supply chains. The scope provisions (including smaller in-scope EU firms while leaving non-EU peers of a similar size aside) paired with significant high compliance burden provide grounds to argue that the CSDDD impacts on the competitiveness of these smaller in-scope EU companies, and thus the EU economy at large.

Dual clusters in dual economies: understanding innovation in clusters of developing countries

Abstract In developing countries, clusters not only have a dual configuration with pronounced differences in company performance but are also embedded within the framework of dual economies. This restricts the capacity of networks to facilitate the innovation processes of local firms. We provide empirical evidence that supports this hypothesis by analyzing local and multinational firms in 18 Latin American clusters. Our findings can improve the understanding of innovation processes in underdeveloped countries, suggesting that dualism should be considered as a determining factor.

Firm ownerships matter in measuring carbon footprints and its driving forces in China's domestic value chains.

Some research has studied the carbon footprints of the multinational enterprises (MNEs) in the global value chains (GVCs). However, currently there are few studies have studied the carbon footprints of the foreign invested firms (FIFs) distributed in different provinces in China's domestic value chains (DVCs). This paper has used China's inter-provincial input-output table distinguishing domestically owned enterprises (DEs), Hong Kong, Macao, and Taiwan (HMTs) invested enterprises and other foreign invested enterprises (FIEs) to study the carbon footprints of the FIFs in China's DVCs and further analyzed the driving factors of the carbon footprints change. The results show that: (1) In 2017, more than two-thirds of the carbon footprints came from FIEs and this proportion had decreased 5.6% compared with 2012. The FIFs located in coastal provinces or economically developed areas basically have the largest carbon footprints. (2) The production activity of the FIFs located in some developed provinces has mostly driven the carbon emissions of other provinces that have direct or indirect trade with them. While in some less affluent energy provinces, it has mainly driven the carbon emissions of the local DEs. (3) The biggest driving factor for reducing the carbon footprints of the FIFs is the carbon emissions intensity of the DEs, followed by the input-output relationship between DEs and FIFs. The final product production of the HMTs is the largest driving factor that promoting the increase of the FIFs' carbon footprints, followed by the final product production of the FIEs. However, different driving factors have different contributions in different provinces. The research results of this article have important research significance for reasonably introducing foreign investment and promoting the reduction of the FIFs' carbon footprints in various provinces in China.

Pathways to remedy for corporate human rights abuse: a qualitative comparative analysis of the institutional design of the OECD national contact points

ABSTRACT In light of the considerable challenges faced by victims of transnational business-related human rights abuses in accessing legal remedies, the National Contact Points (NCPs) for the Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises are recognised as prominent international mechanisms for remedy. However, the NCPs exhibit considerable institutional diversity, impacting their effectiveness. The 2023 revision of the OECD Guidelines has raised questions about whether changes to NCP procedural guidance may improve access to remedy. However, because empirical research into the substantive remedy outcomes available through NCPs is limited and largely based on small-N case studies, it is unclear which features of institutional design improve access to remedy. Starting from the assumption that there may be different procedural combinations that facilitate access to remedy, this article uses Qualitative Comparative Analysis on a novel dataset of 81 cases concerning allegations of human rights abuse handled by NCPs to explore combinations of institutional design features leading to effective remedy. Some of the findings align with existing research – especially confirming the relevance of the mandate to ‘make a determination’ – but others contradict conclusions reached in previous research. The 2023 revision of the OECD Guidelines is discussed in light of these findings.

Firm Attributes and Financial Reporting Quality of Listed Multinational Firms in Nigeria

Firm Attributes and Financial Reporting Quality of Listed Multinational Firms in Nigeria

Wake Not a Sleeping Lion: Free Trade Agreements and Decision Rights in Multinationals

ABSTRACTFree trade agreements with rules of origin affect the location of input production for vertically integrated multinational enterprises. The relocation induced by a free trade agreement changes the allocation of decision rights within multinational enterprises and the purpose of transfer pricing from avoiding high taxes to strengthening their product market competitiveness. This study shows that a free trade agreement with rules of origin may hurt both a multinational enterprise and a local firm, despite tariff elimination, when the relocation occurs and the decision rights change from centralization to decentralization. Moreover, such a free trade agreement can hurt consumers. Nevertheless, rules of origin increase the feasibility of free trade agreements due to larger tax revenues.

The negative expectation–performance gap and internationalization speed of EMNEs: the moderating effect of organizational slack

PurposeThe purpose of this study is to investigate the impact of the negative expectation–performance gap on the internationalization speed as well as the moderating role of organizational slack, based on the performance feedback theory and the springboard perspective.Design/methodology/approachThis paper takes the Chinese A-share listed companies engaged in outward foreign direct investment (OFDI) between 2010 and 2022 as the research sample. A two-way fixed effects model is employed to test the research hypotheses, using a dataset comprising 6,868 observations.FindingsThe findings show that there is a positive relationship between the negative expectation–performance gap and internationalization speed for Chinese multinational enterprises (CMNEs). In addition, this effect is stronger in private CMNEs. Furthermore, the relationship is negatively moderated by organizational slack. Additional findings suggest that that negative industry expectation-performance gap has a stronger impact on the internationalization speed. The moderating effect of unabsorbed slack resources is more pronounced.Practical implicationsWhen emerging market multinational enterprises (EMNEs) face the dilemma of underperforming, they may consider a rapid internationalization strategy as a solution to improve performance. However, EMNEs should be wary of falling into a resource trap. Organizational slack reduces managers’ incentives to identify issues associated with negative performance feedback, thereby diminishing the likelihood of addressing performance challenges through rapid internationalization. For state-owned EMNEs, optimizing organizational structure and improving the efficiency of responses to negative performance feedback are essential.Originality/valueUnlike previous studies, this paper integrates performance feedback theory and the springboard perspective to explore in depth the relationship between performance feedback, internationalization speed and organizational slack within the context of managers’ cognitive and decision-making mechanisms. It also examines the distinct impacts of historical and industry negative expectation–performance gaps as well as the different moderating roles of absorbed and unabsorbed organizational slack, which have not been explored together before.

Infrastructure Investments under Pillar Two: A Substitute for Tax Payments?

Governments often offer tax incentives to multinational enterprises to encourage the development of large infrastructure projects, creating a mutually beneficial arrangement that fosters investment and economic growth. However, the introduction of the OECD’s Pillar Two framework and subsequent implementation of legislation in many countries, which mandates a global minimum tax rate of 15%, has placed these tax incentives under scrutiny. This article explores whether infrastructure investments could be classified as a substitute for tax payments under the new Pillar Two rules. Through practical examples and analysis, the authors examine the challenges and opportunities for businesses navigating this shifting landscape, offering insights into how multinational enterprises can align their strategies to meet compliance while continuing to support infrastructure development in host countries.

Global Value Chain Envelopment: How Do Emerging Multinational Enterprises Innovate and Compete in Green Transitions?

How are emerging market multinational enterprises (EMNEs) able to innovate and compete with developed market multinational enterprises (DMNEs) in green global value chains (GVCs)? Focusing on the rapid growth of the electric vehicle (EV) industry in China, we introduce the novel concept of GVC envelopment. This concept explains how EMNEs strategically integrate into GVCs dominated by DMNEs, forming cooperative relationships with key suppliers and partners to create synergies and achieve economies of scale. Through a three-stage process, EMNEs not only contribute to the global green transition but also challenge traditional global players. The paper offers critical insights for both multinational enterprise managers and policymakers, highlighting the evolving dynamics of competition and collaboration in global green transitions.

How Can International Business-to-Business Partnerships in Africa Contribute to Achieving the Sustainable Development Goals?

Following calls by international business scholars to pay attention to how multinational enterprises contribute to the Sustainable Development Goals, we make implementable recommendations for international B2B partnerships in Africa. We postulate that international businesses can alleviate extreme poverty and eradicate child labor by selecting ethical African suppliers. Furthermore, partners must exercise transparency in how they adopt clean and environmentally sound technologies. We also highlight that partners should demonstrate flexibility and open-mindedness to African indigenous know-how and sustainable practices to facilitate knowledge-sharing. International B2B partners may consider our recommendations to guide the building of ethical and responsible businesses in Africa.

Responsive Corporate Social Responsibility: Insights Into Institutional and Agency Factors Influencing Japanese Multinational Enterprises

ABSTRACTThis manuscript investigates the factors influencing the selection of responsive corporate social responsibility (CSR) programmes in the subsidiaries of Japanese manufacturing multinational enterprises (MNEs) operating in Indonesia. With a significant and growing manufacturing sector funded by foreign direct investment—of which Japanese MNEs are a major participant—Indonesia offers a novel but significant focus given its low GDP per capita, ecological challenges and being one of the first nations in South‐East Asia to mandate CSR practices. Institutional and agency theories provide a multitheoretical lens for this responsive CSR study enabling a rich, robust framework for addressing both the external and internal drivers of CSR. This study uses a qualitative approach with a sample of four Japanese manufacturing MNEs. The data were collected by interviewing managing directors and CSR personnel of the subsidiary organisations and investigating the CSR practices in secondary data sources from websites and CSR reports from both the headquarter and subsidiary organisations. A proximity effect based on a combination of the size and location of the subsidiary operation was found to be important in determining responsive CSR activities. Personal preferences and connections with the community were also identified as key factors. Feedback loops were identified through MNE CSR reports and websites, which could influence other MNEs and community stakeholders seeking funding. This study's main contribution to the literature is the development of a conceptual framework that details both the internal and external factors influencing the decision‐making process of responsive CSR.

The multinational enterprise, capabilities, and digitalization: governance and growth with world disorder

Abstract This essay revisits my 2014 JIBS article about the potential for integrating international business internalization theory with a strategic management capabilities perspective. It recaps the capabilities framework with an emphasis on the learning required of emerging market multinationals and illustrates this with the case of Hyundai Motor Company’s internationalization and growth. It also discusses two aspects of the global economy that have become more prominent since 2014 in shaping international business: geopolitical uncertainty and digitalization. A rise in geopolitical tensions appears to be rebalancing the relationships between multinationals and home/host governments. Digitalization facilitates international business; but it adds new vulnerabilities by (further) accelerating competition, enabling new rivals, and introducing systemic risks into digital supply chains. Implications for managers, board members, and international business scholars are drawn.

The Moderating Role of Corporate Governance in the Relationship Between Transfer Pricing and Tax Avoidance

This study investigates the relationship between transfer pricing (TP) and tax avoidance (TA), with corporate governance (CG) serving as a moderating variable. The research focuses on manufacturing firms listed on the Indonesia Stock Exchange (IDX) from 2017 to 2022. The sample comprises 180 observations derived from 30 multinational manufacturing companies, selected through a purposive sampling technique based on specific criteria. Panel data regression analysis was employed, utilizing models both with and without the moderating variable. The findings indicate that TP positively influences TA, suggesting that transfer pricing practices are associated with higher levels of tax avoidance. However, the study also reveals that strong CG can mitigate the positive impact of TP on TA, thereby underscoring the moderating role of effective governance mechanisms. These results highlight the importance of robust CG in reducing tax avoidance practices facilitated through transfer pricing. This study offers practical recommendations for strengthening corporate governance and implementing stricter regulatory oversight of transfer pricing activities. By enhancing governance frameworks, policymakers and companies can better address the ethical and financial implications of tax avoidance in multinational enterprises. Keywords: transfer pricing, tax avoidance, corporate governance, multinational manufacturing compani

A framework of cross-system knowledge flow: based on the investigation of sociotechnical experiments in Japan

ABSTRACT Over the past four decades, the framework of the innovation system has undergone continuous refinement and concretization, establishing itself as an effective tool for analyzing institutional innovation. The Triple Helix framework provides a quantitative direction and dynamic perspective for studying the Regional Innovation System. Due to exchanges on the market, scholarly communication in knowledge production, and political discourse, scholars have proposed introducing additional dimensions to explain local-global knowledge flow [Leydesdorff, L. 2012. “The Triple Helix, Quadruple Helix, … , and an N-Tuple of Helices: Explanatory Models for Analyzing the Knowledge-Based Economy?” Journal of the Knowledge Economy 3 (1): 25–35. https://doi.org/10.1007/s13132-011-0049-4]. This study presents a cross-system framework between the Regional Innovation System and the National Innovation System based on an investigation of regional sociotechnical experiments conducted in Japan, which provides insights for extending the Triple Helix framework. Furthermore, we distinguish different patterns of knowledge flow and highlight the potential hubs played by the universities, multinational enterprises, and local governments, offering practical guidance for facilitating cross-system knowledge flow.

Informal Institutions and Multinationals' Drive Towards Sustainable Development Goals (SDGs): A Dark‐Side Perspective

ABSTRACTThis study explores the influence of informal institutions (including its dark side) on multinational enterprises (MNEs) in promoting sustainable development goals (SDGs) in a developing nation. Using qualitative interviews, we find that informal institutions, including “crime” and “corruption,” increase telecommunication MNEs' support of SDGs. Our findings underscore the critical role of understanding and harnessing informal institutions, showcasing their significant impact on shaping the actions and contributions of MNEs. This research not only contributes to institutional theory but also provides empirical evidence of MNEs positively influencing local communities for sustainable development including socially embedded projects, knowledge externalities, and rural infrastructure. The study advocates for a collaborative approach involving government, local communities, and MNEs to ensure the effective implementation of SDGs. Consequently, the study offers valuable insights for policymakers, academics, and practitioners navigating the complex dynamics of MNEs' involvement in SDGs within developing countries.

Climate Risk and Foreign Direct Investment Entry Mode

ABSTRACTThe paper examines how climate risk impacts the strategic entry mode choices—between greenfield investments and cross‐border mergers and acquisitions (M&As)—of multinational enterprises (MNEs) into foreign markets. Our study adds to existing literature through a cross‐countries empirical analysis and uses a newly developed dataset, the Multinational Revenue, Employment, and Investment Database (MREID), that accounts for how both physical and transition risks of climate change affect MNEs' entry mode choice. Physical risk refers to the tangible impacts of climate change such as extreme weather events, while transition risk involves regulatory and policy changes associated with moving towards a low‐carbon economy. Using data for 139 source countries and 134 destination countries over the period from 2010 to 2021, we find that an increase in the physical risk of climate change leads to MNEs choosing greenfield investment when entering a new market while a higher level of transition risk discourages greenfield investment. Physical risk has a negative and significant influence on MNEs' entry choice of using cross‐border M&A. There is a positive and significant correlation between transition risk and cross‐border M&A though such a relationship is not robust. Industrial‐level evidence shows a similar pattern in the majority of the industries. Our findings provide policymakers with guidelines helping to mitigate the negative impact of climate change on business decisions at the global level.

Liability of outsidership in multinational enterprises: a review and research agenda

PurposeThe purpose of this paper is to discuss the notion of the Liability of Outsidership (LoO) in multinational enterprises’ (MNEs) operations, following Johanson and Vahlne's (2009) revision of the Uppsala model. This study seeks to identify the sources of outsidership and the strategies used by MNEs to overcome these liabilities, providing a comprehensive overview for practitioners, academics and policymakers.Design/methodology/approachThis paper studies firm-level operations and investigations of foreign direct investment by MNEs. By synthesising existing research and theoretical frameworks, this study identifies key dimensions and determinants of LoO and offers insights into its implications for international business strategy. This paper’s approach ensures a holistic understanding of the concept, drawing from diverse sources to present a well-rounded perspective.FindingsThis study reveals two broad themes in the literature: firm-specific factors, such as market entry decisions, managerial attributes and business nature, and country-specific factors, including economic, social and political conditions. The authors highlight critical insights into these factors and identify successful strategies that MNEs use to become embedded in local networks.Research limitations/implicationsThe insights from this study will aid academics and researchers in gaining a comprehensive understanding of the LoO and identifying future research directions. Additionally, this study will assist MNE leaders and managers in understanding the key dynamics of foreign markets and the critical factors to consider in their internationalisation strategies.Originality/valueThis study discusses LoO in MNEs by offering a holistic overview to identify the sources of outsidership and the strategies used by MNEs to overcome these liabilities. This paper highlights key gaps and areas for future research and proposes practical strategies that MNEs can adopt to overcome outsidership, thereby serving as a valuable resource for both practitioners and policymakers.

Current Status and Issues of APAs in Japan and Singapore

This article examines the evolution of advance pricing arrangements (APAs) in Japan and Singapore, highlighting their increasing relevance in managing cross-border transfer pricing risks and obtaining tax certainty. It provides a comparative analysis of current practices, historical developments and key challenges faced by multinational enterprises in these two major economic hubs.

Effect of foreign direct investment on income inequality in Ghana

The objective of this study was to investigate the impact of foreign direct investment (FDI) on income inequality in Ghana, by examining the effect of FDI flow, FDI stock and FDI per capita on income inequality in Ghana. The study adopted the quantitative and descriptive research design to analyse annual time series data on the dependent and independent variables spanning twenty-seven (27) years from 1996 to 2022. The ordinary least square and seemingly unrelated regression techniques were used for data analysis. The study revealed that FDI flow, FDI stock and FDI per capita had a statistically significant positive effect on income inequality. The study thus recommended that the government of Ghana should intensify its efforts to carefully develop and implement progressive and attractive policies that can induce more investment from foreign multinationals, thereby increasing the stock of external capital inflows that can be channeled into the most value generating sectors of the country to eliminate production inefficiencies and boost domestic output that can increase income inequality. Additionally, the government of Ghana through the appropriate agencies can improve the enforcement of its regulatory policies to ensure that multinational firms and the general activities of foreign investors consistently provide fair and commensurate wages to Ghanaian workers, in order to promote the beneficial effects that FDI has on reducing income inequality in Ghana. MNCs must therefore provide the same value of remuneration for the same level of skills-quality and demand that workers in other economies would receive. This will eliminate wage differentials, transition low-wage earners into higher income status and thus reduce income inequality.