Presence Of Multinationals Research Articles

Industrial districts, multinational corporations, and their local/global paradoxes

Over the past fifteen years, several studies have used the organizational theory of paradoxes to understand some typical organizational tensions, including that between global and local dimensions typically faced by multinational corporations. ese studies analyze paradoxical tensions at the organizational or even intra-organizational level, while the paradox lens has not yet been applied to study systems such as industrial districts. is paper attempts to do so by analyzing and comparing the local/global paradox in multinational corporations and industrial districts. For the latter, the analysis rests on some empirical studies conducted on Italian districts. Moreover, as the presence of multinationals in these districts has become stronger in the recent phase, an attempt has been made to understand if and how this phenomenon impacts the local/global tension at the district level.

Exploring minimal indirect digital economy taxation as a post-COVID-19 economic recovery strategy for African revenue mobilisation

The COVID-19 pandemic and its aftermath continue to devastate most areas of society and continue to reveal inherent structural vulnerabilities in the economies, social, and health systems in countries. In addition, the Russia-Ukraine conflict of 2022 and the geopolitics of its resolution continue to create shocks across the globe- evidenced by rising inflation, increased sovereign debt level, recession, and reduced public expenditure among others. While many sectors of the economy were crippled by the back-to-back global economic shocks of the Covid-19 pandemic and the Russia-Ukraine conflict through reduced economic activities resulting in a global recession and reduced tax revenues for public expenditure, the digital economy has surprisingly boomed and continues to grow in this period of uncertainty. This has been directly attributed to the 'lure of the alternative', caused by the social and economic lockdowns imposed by countries, which pushed many persons and companies to explore the next available option- online platforms to conduct business. Although the rise in the use of digital platforms for business activities is commendable, this development has some implications for traditional business frameworks which in turn affects revenue mobilisation for funding public infrastructure projects and services. This is because, in Africa, the digital economy is not as well-regulated as the traditional economy. This creates an avenue for tax evasion and avoidance, arising from the dynamic and complex nature of digital transactions. This challenge requires that urgent solutions be found for the effective taxation of the digital economy. There will be a need to review/reform economic and fiscal policies and laws to ensure a faster recovery from the economic effects of the COVID-19 pandemic. There would also be a need to create digital tax policies that are equitable for source and market jurisdictions and, lastly, there will be a need for cooperation in tax law and policies across Africa that capture the reality of the growth and ubiquitous presence of digital multinationals in Africa.

The rise and transformation of big business in Argentina (1913–1971)

AbstractThis article analyses the structure and changes of large companies based on a new database of the 200 largest non-financial firms operating from 1913 to 1971 in Argentina. The main contribution of the research consists of the elaboration of the rankings of the 200 largest companies according to their paid-up capital between 1913 and 1971 and the construction of a database of large companies based on homogeneous sources and criteria. The study identifies the long-lasting presence of family-based diversified business groups and foreign multinationals from the first global period to the end of Import Substitution Industrialisation. It also shows that the presence of foreign companies among the 200 largest firms is higher than that identified in other countries. The study constitutes the first comprehensive research into big business in Argentina until the 1970s and a first attempt to identify the life cycles of the largest companies in Argentina.

Foreign Direct Investment, Foreign Certification and Firm Performance in Morocco: Evidence from the World Bank Enterprise Survey

Abstract In an increasingly complex international environment, the expansion of global capital flows, particularly foreign direct investment (FDI),has become an important catalyst in developing countries, in part due to a large and significant integration into global value chains (GVCs). Theoretically, the presence of multinationals in the host country is supposed to increase productivity, employment, wages, know-how, and technology of domestic firms. However, so far, the results in the empirical literature have been unclear, mainly due to the limited reliable and detailed enterprise-level data. As a result, in this paper we attempt to examine whether there is a significant difference between multinationals (MNE) and domestic firms in Morocco on a set of economic performance outcomes. To do so, we used firm-level data obtained from the World Bank Enterprise Survey for the year 2019, using a quasi experimental technique called propensity score matching (PSM). The results reveal that the difference between foreign-owned and domestic matched firms leads to a decrease in labor productivity, higher employment and non significant impact on wages. In addition, our findings indicate that the use of foreign certification shows a positive impact on the demand of skilled labor than for foreign ownership indicator.

Haiku Seven Gastronomicity

Haiku is an unrhymed verse form of Japanese origin having three lines containing usually five, seven, and five syllables respectively, a poem in this form usually having a seasonal reference. I have always been searching for new ways to express myself and my recent collection of Haiku in ‘In One Breath’ was published in 2022. I chose to do seven Haiku to capture the various foods I enjoy covering a myriad of cuisines that reflect a very multicultural Singapore with multinational presence. Not that I am numerologist, but the number seven was particularly interesting because it consisted of the union of the physical (number 4) with the spiritual (number 3), and in Pythagorean numerology the number 7 means spirituality. Furthermore, as an early prime number in the series of positive integers, the number seven has also greatly symbolic associations in religion, mythology, superstition, philosophy and now in poetry as it reflects both the physical and spiritual nature of food. Food that unites and reunites relationships, always prepared with love and respect for the origins of the recipe and respect for the consumer as it becomes one with the body that enjoys its nourishment and teases the senses.

Firm performance in the financial industry: the role of foreign entrants and their origin

PurposeThis study aims to provide firm-level evidence on the relationship between the presence of financial services multinationals and indigenous counterparts’ performance, using a comprehensive sample of firms in the emerging financial industry in Vietnam.Design/methodology/approachThis study uses the generalized method of moments with instrumental variables (IV/GMM) to deal with potential endogeneity problem. Of this technique, a pragmatic approach to constructing instruments is adopted, capitalizing on the geographical and industry segmentation of the local market. The empirical analyses also address statistical issues of the overall model significance, heteroskedasticity and multicollinearity.FindingsThe regression results reveal that foreign entrants have a positive and statistically significant association with indigenous firms’ labor productivity and the average wage, with a more pronounced impact on the latter. The increased entry of financial multinationals appears to be uncorrelated with indigenous firms’ profitability. The extended estimations also suggest that investor origin matters in determining spillover magnitude. The average estimate of Asian affiliates in the examined relationship is approximately half that of European affiliates, whereas foreign entrants originating from America show an insignificant role.Originality/valueThis study sheds light on the broader impacts of foreign financial affiliates by simultaneously exploring their impacts on three key dimensions of indigenous firm performance, namely, labor productivity, average wage and profitability. This paper also enriches the existing literature by disentangling the effects of foreign entrants from different regions of origin, which was largely neglected in the context of financial services multinationals.

O efeito dos desastres naturais no investimento estrangeiro direto dos países

Objective: This study aims to analyze the influence of natural disasters on countries' FDI.Method: We used data from 137 countries, considering the period from 2011 to 2017. The secondary data used to measure Foreign Direct Investment are from the UNCTAD - United Nations Conference on Trade and Development following the study by Alfaro et al. (2004). For data on natural disasters, the EM-DAT database - The International Disaster Database provided by CRED - Center for Research on the Epidemiology of Disasters - was used, based on the studies by Toya Skidmore (2007) and Escaleras Register (2011). The analysis was performed through Linear Regression of panel data.Originality/Relevance: This study points to a direction of research for those interested in expanding the flows of Foreign Direct Investment in their countries, being significant in the field of business, government, public policy makers and the third sector.Results: The results show that when an economy suffers from natural disasters that cause deaths and, consequently, a reduction in human capital, foreign investors can negatively portray this fact. On the other hand, the number of occurrences and the loss in millions of dollars when analyzed individually do not discourage FDI and the presence of multinationals in the affected country. The variables: total of injured, total of affected, and total of homeless have no relation with FDI in the analyzed sample. It is indicated that, in the face of a natural disaster, countries create opportunities for the replacement and reconstruction of infrastructure and human capital.Theoretical contribution: We seek to contribute theoretically to the recent increase of studies that verify the relationship between natural disasters and FDI in the light of the institution-based view. We direct greater understanding to the premise that natural disasters affect a country's economy as they cause FDI reduction, and we provide the foundation for future studies. While previous studies are concerned with FDI determinants, being tax incentives and property rights, this study focuses specifically on the different variables that aggregate natural disasters. In addition, the study aims to expand the perception of decision makers, belonging to the government, private entities and the third sector, so that they can reduce and prevent the occurrence of natural disasters, thus attracting FDI flows in their countries.

Multinational enterprises, industrial relatedness and employment in European regions

AbstractThis article investigates the link between multinational enterprises (MNEs) and employment in their host regions by cross-fertilising the literature on MNE externalities with the emerging body of research on industrial relatedness. The link between employment and MNE presence in the same and related industries is tested for European regions. The results suggest that cross-sectoral MNE spillovers are mediated through industrial relatedness and that they are positively and significantly associated with higher employment levels, independently of input–output relations. Our results indicate that regions characterised by lower factor prices are likely to benefit the most from the presence of multinationals in terms of employment, but these benefits are concentrated in high knowledge-intensive sectors, potentially fostering inequalities within less-developed economies.

Employment protection laws and corporate cash holdings

Abstract We study how employment protection laws (EPLs) affect corporate cash-holding decision. By exploiting within-country changes in EPLs across 20 OECD countries as a source of variation in labor adjustment costs, we show that following an increase in the stringency of EPLs, firms’ cash holdings increase significantly. This relationship is stronger for firms with high labor turnover, no multinational presence, or financial constraints, indicating that labor adjustment cost raising distress risk is the mechanism in play. Cash buffers created by firms faced with stricter EPLs help them mitigate the underinvestment problem in subsequent episodes of industry-wide distress. Consistent with this precautionary motive, the market's valuation of excess cash is positively associated with the EPL strictness. We further demonstrate that the response of cash policy to changes in EPLs is distinct from that of debt policy or investment policy. Our evidence highlights the role of interaction between labor-market and financial frictions in determining the level and the value of corporate cash.

Governance and accounting practices in the Fugger family firm at the beginning of the sixteenth century

This article discusses the governance and accounting practices of the Fugger family firm in the late fifteenth and early sixteenth century under the leadership of Jakob Fugger II (1459–1525; hereafter Jakob Fugger). The Fugger family firm engaged in numerous enterprises, primarily centered on textile trading, banking, and mining of silver and copper. The management of the firm required sophisticated governance and accounting practices, knowledge of which Jakob Fugger appears to have acquired during his residence in the Venetian Republic in the years 1473 through 1487. At that time, Venice was the most important trading and financial center in Europe. When Jakob Fugger returned to Augsburg, Germany in 1487, he modeled the governance and accounting practices of his firm after those of the Italian city-states and eventually expanded the operations of his firm into one of the most important banking houses in sixteenth-century Europe, with more than a dozen branches and a multinational presence.

Chinese Companies and Foreign Direct Investment in Brazil between 2000 and 2018.

The article aims to understand the relationship between Foreign Direct Investment (FDI) and the presence of Chinese multinationals in Brazil. To achieve its purpose, the text retrieves theoretical elements about FDI and the theories that explain the process of internationalization of companies, in order to explain the growing presence of Chinese multinationals in the country. We used data from official sources, such as the Central Bank of Brazil (CBB), UNCTAD and the Ministry of Commerce of China (MOFCOM), and from unofficial sources, such as the American Business Institute (ABI) and the Brazil China Business Council. We present some case studies of multinationals such as Sinopec (petroleum sector), Didi Chuxing (Technology/ Startup), State Grid (Electric Power) and Chery Automobile (Auto Industry), with intent to show the modus operandi of companies from different economic sectors. To analyze these companies, we used data from their websites and other information available online. As a preliminary conclusion, it can be stated that Chinese FDI in Brazil increased significantly during the 21st century, when compared to the total direct investment from other countries. The Chinese multinationals in Brazil focus their interests in search for raw materials and sale of products with greater added value.

Ownership Structure and Productivity of Multinationals

We examine the ownership structure and productivity of multinational affiliates and their effects on domestic industry. We first separate plant-level efficiency into a physical productivity and a price component. Multinationals target plants with high prices and markups. Upon acquisition they raise physical productivity but lower prices, leaving markups unchanged, especially when they are majority owners. This pro-competitive effect means that multinationals' productivity effects may be previously under-estimated. Multinational presence in an industry increases physical productivity while lowering prices at domestic firms, especially when majority-owned affiliates are present. Ownership structure and foreign acquisitions therefore play an important role in driving aggregate productivity growth.

Developing Capabilities in Mozambique's Food Processing Sector - The Role of South African Food Processing Firms and Supermarket Chains

Food processing is a high value-added sector which brings opportunities for long-term employment, skills development and technology transfer. This paper considers the potential for developing Mozambique’s food processing industry for the purpose of enhancing the country’s industrial landscape. With local value addition being relatively weak in Mozambique and, given a sizeable presence of South African multinationals that are investing and trading in the food sector, there are opportunities to create dynamic linkages for the accumulation of productive capabilities for mutually beneficial industrialisation strategies. While more coherence amongst existing initiatives undertaken by the government of Mozambique is required, a variety of initiatives to develop the capabilities of local suppliers need to be developed for a broader regional industrialisation agenda.

Dangers of Residual Dependency in State-permeated Capitalism: The Case of Brazil during Labor Party Rule

In contrast to China and India, Brazil shows some marked deviations from the model of a state-permeated economy. While it shares a focus on a large domestic market, crucial institutional complementarities and a substantial ability for coordination between state and business, it still suffers from the remaining residual dependency on Western capitalism. From this perspective, Brazil moved into a promising direction during the rule of the Labour Party. However, the Labour Party governments were unable to fully unfold the institutional complementarities in state-permeated capitalism in order to make the Brazilian economy more independent from external pressures. They suffered from a limited ability to use the large domestic market for the support of domestic Brazilian companies, from negative consequences of financialization, and from numerous frictions for domestic economic coordination due to the forceful presence of foreign multinationals in economic sectors that are key for productivity development.

The Impact of Multinational Presence on Domestic Investment: Firm‐Level Evidence from South Korea

In order to analyze the effects of foreign multinationals' presence on domestic firms' investment, we use a detailed firm level data set from South Korea for the 2006–2014 period. We combine it with the input‐output tables provided by the Bank of Korea to construct industry level measures of multinational presence in sectors that are horizontally and vertically linked, and estimate dynamic investment equations that are augmented with these foreign presence measures. We find a positive and significant effect of foreign presence in both horizontally and vertically linked industries on domestic firm's investment rate, with larger effects arising from multinational presence in the supplying sectors. Quantitatively, a 2 percentage point increase in the presence of multinational suppliers increases the domestic firm's investment rate by 3.24 percentage points. We also find that this effect is larger for small and medium firms, private firms, nonexporters, firms that are not part of a chaebol, and for firms in external finance dependent industries. A similar 2 percentage point increase in the foreign presence in downstream sectors increases the investment rate of domestic suppliers by 0.55 percentage points. This effect is larger if the domestic firm is part of a chaebol, or is in a less external finance dependent industry. Investment increase by 0.53 percentage points following a 2 percentage point increase in horizontal linkages.

A critical literature review on the link between multinational enterprises presence, absorptive capacity and competitive advantage of firms

Scholars seem to agree on the importance of the local activity of foreign MNEs for country’s development, but opinions differ widely concerning their impact. As the government work out policies to improve Foreign Direct Investment, questions that need to be answered include how Multinational Enterprises affects the competitiveness of the local domestic enterprise. This paper presents a critical review of literature on the link between the presence of Multinational Enterprises, absorptive capacity and the competitiveness of domestic firms. A number of theories have been presented and empirical literature reviewed on the key constructs of the study. A conceptual model on the relationship was developed showing the link between MNEs presence, absorptive capacity and competitive advantage. Absorptive capacity was conceptualized as an intervening variable and was operationalised as research and development activities, internal and external organization of innovation and quality of human capital. This relationship was conceptualized as moderated by distance which was operationalised as culture, physical location and institutional difference. The competitiveness for the purpose of this study was conceptualized to mean productivity and innovation advantage. The reviewed literature confirms the fact that MNEs presence act as a source of knowledge which is transferred to domestic firms which in turn achieve competitive advantage. This transfer is made possible by the existence of the absorptive capacity among the firms. For that reason we emphasize that FDI related policy needs to be concerned not only with attracting MNEs, but also with securing effective benefits. In other words, policy makers must consider all factors that hinders knowledge transfer to the domestic firms like the absorptive capacity. The reviewed literature support the argument that the greater a firm’s exposure to knowledge sources, the greater the firm will acquire the competitive advantage. Like all research, the present study has limitations mainly the lack of primary data as it was more of a conceptual study.

Multinational exposure, export variety and price: Evidence from Chinese electronics exporters

Using a matched firm-transaction dataset on the electronics industry in China, we provide one of the first attempts to examine whether foreign direct investment (FDI) has direct impacts on the export prospects of domestic firms, in terms of export variety and unit price. Using measures of multinational presence constructed at region and industry levels, our results reveal little evidence of multinational spillovers arising from an increase in the export variety of domestic firms. The growing presence of multinational firms has a strongly negative association with the export unit value of domestic firms, suggesting that exposure to multinational firms may intensify the competition in the product market and force local firms to offer lower-value products in the international markets. This adverse influence is mainly driven by processing trade as opposed to ordinary trade, with private firms being less affected by export spillovers than state-owned enterprises. We also find that the productivity of firms can mitigate the negative effect of the exposure to multinational firms on the unit value of exports.

The Impact of Multinationals on the Size of the Banking System

SummaryAfter the global financial crisis, the size of the banking sector has become a hotly debated topic. To measure the size of the banking system a country's banking assets divided by the country's gross domestic product (GDP) is commonly applied as a general yardstick. This paper shows that this yardstick does not take into account differences in financial needs. In particular, countries differ with regard to the number and size of multinational enterprises. In a cross‐country empirical study, we find a statistically significant relationship between the presence of large banks and the presence of multinationals, after controlling for the size of the country. That is why we develop an additional specific yardstick for firm specific financial needs.

Why the oil companies lost solar

Solar energy is a growing source of electricity supply. Oil companies including BP and Shell recognized this early on and entered the solar industry when it was still in its relative infancy. These companies invested heavily in vertically integrated solar companies that were at one point among the largest in the world. But neither BP nor Shell was successful, and they both decided to exit the solar market. This stands as a paradox since such companies have the funds, the long-term perspectives, the management systems, the multinational presence and the lobbying clout to potentially succeed in this new energy industry. Why were they not successful, and why did they ultimately exit? This paper uses innovation theory to explore the reasons why large incumbent corporations typically fail to succeed in commercializing disruptive innovations at scale. Evidence from semi-structured interviews and discussions with former employees of BP Solar and Shell Solar confirm the explanatory power of key constructs from innovation theory in accounting for the big oil companies' experience with solar technology. Ultimately, the findings suggest that oil companies would have done better to treat their solar businesses as separate stand-alone entities.

FOREIGN DIRECT INVESTMENTS AND MANUFACTURING SECTOR PERFORMANCE IN NIGERIA, (1970-2009)

The study examined the relationship between foreign direct investment and the value added to the manufacturing industry in Nigeria, between the period 1970 and 2009. In view of the development and industrialising desires of Nigeria, as well as the foreign aid received in form of private investments, it is pertinent to examine the effect the presence of multinationals has had in shaping the Nigerian manufacturing industry. Using the autoregressive lag distribution technique to determine the relationship between foreign direct investment and manufacturing value added, it was discovered that in the long-run, foreign direct investments have had a negative effect on the manufacturing sub-sector in Nigeria.