Nonmarket Capabilities Research Articles

Social and political capabilities as nonmarket activities: What are they and how do firms develop them?

AbstractFirms recognize the need for strategic efforts in the nonmarket environment to improve their performance. We seek to explore the different ways in which firms learn about nonmarket strategies (NMS), whether the social or the political dimension. We conducted a search of previous NMS studies and analyzed this literature to reflect on the process of development and evolution of political and social corporate capabilities. Based on the theoretical insights of resource dependency theory (RDT) and the resource‐based view (RBV) and its variants, we adopt an external perspective of how firms capture critical political and social knowledge in the nonmarket environment and an internal perspective of how firms develop nonmarket capabilities from this new knowledge. We argue that the new knowledge obtained from the observation of peer firms, from co‐opting and collaborating with nonmarket and market actors and from their own experiences is incorporated into the firm's knowledge system and allows for the development and evolution of capabilities to integrate and deploy resources for strategic purposes. We also point out that changes in the nonmarket environment require firms to constantly seek new social and political capabilities. They learn, unlearn and relearn.

The Role of Multinationals in the Energy Transition

The primary aim of the proposed symposium is to discuss research questions focused on the implications of climate change for international business and on the role IB scholars can play in addressing climate change through a multi-level perspective. Building on seminal and own work of the organizers and presenters, the symposium will highlight important aspects at the intersection of climate change and IB as well as possible directions for future research and knowledge generation. It offers a platform for discussion and mutual learning among participants and should ideally ‘produce’ follow-up activities. Public policy, non-market capabilities and energy transition through foreign investments Presenter: Joao Albino Pimentel; U. of South Carolina, Darla Moore School of Business Leveraging dynamic capabilities for the energy transition: balancing energy sources Presenter: Birgitte Grogaard; BI Norwegian Business School Presenter: Helene Loe Colman; BI Norwegian Business School Presenter: Thao Vo; BI Norwegian Business School The oil and gas industry and its role in the energy transition Presenter: Andrew Inkpen; Thunderbird School of Global Management at ASU Interorganizational networks in energy transition collaboration Presenter: Randi Lunnan; BI Norwegian Business School MNE-specific responses to energy transition regulations Presenter: Michael Nippa; Free U. of Bozen-Bolzano Presenter: Markus David Taussig; Rutgers Business School

Dynamic non-market capabilities in developing countries: an exploratory study

Dynamic non-market capabilities in developing countries: an exploratory study

Positive institutional changes through peace: The relative effects of peace agreements and non-market capabilities on FDI

Positive institutional changes through peace: The relative effects of peace agreements and non-market capabilities on FDI

Firm Exposure to Environmental Regulations: Multinational Mobility and Non-Market Capabilities

What types of firms are attracted or deterred by strict environmental regulations? In this paper, we contribute to answering that question by identifying configurations of firm capabilities that favor their exposure to relatively stricter or laxer regulations in their global operations. We propose that firms’ bundles of technical capabilities- in the form of technological and environmental capabilities-, multinational mobility capabilities, and non-market capabilities -in the form of political and social capabilities-, shape their ability to comply vs. arbitrage. We study the 709 international acquisitions and divestments of polluting activities of 50 French multinationals over 2005-2017. The results of our fuzzy set qualitative comparative analysis suggest that, on the one hand, some firms target countries with strict regulations when investing in polluting industries, primarily because their bundle of capabilities reduce the cost of compliance they face relative to peers, and on the other hand, some firms target countries with lax regulations because their mobility and non-market capabilities reduce the cost of regulatory arbitrage. Thus, our paper contributes to research on firms’ responses to environmental regulations, speaks to the resource based view of the firm and to non-market strategy research.

The Influence of Political Capabilities and Diplomatic Relations on Innovation Offshoring

Firms can derive significant benefits from locating innovation activities in foreign countries. Yet, such offshoring of innovation activities comes with notable downsides, particularly the risk of innovation misappropriation in host countries with weak intellectual property rights (IPR) regimes. Although prior research has focused on how firms attempt to manage this downside risk through innovation-specific remedies and knowledge protection strategies, the role of firm nonmarket capabilities, notably political capabilities, has thus far been largely overlooked. We argue that firm political capabilities can help protect firms from the possible misappropriation of their intangible resources in weak IPR regimes, but that this effect will only materialize when a firm’s home and host countries maintain favorable diplomatic relationships. Our theorizing thus considers multiple levels of political influence that affect a firm’s ability to overcome the risks associated with weak IPR regimes. We find support for our predictions in a sample of 479 innovation offshoring investments made by 102 firms from 12 home countries over the period 2003-2010.

Strategic Model in Increasing the SMEs Competitive Advantage in South Sulawesi

The study of SMEs development has become an interesting issue in the field of education including because of its great contribution to society and nation. The research objectives are to describe 1) the effect of government intervention toward the increase of Small and Medium Enterprises (SMEs) innovation capabilities and competitive advantage in South Sulawesi; 2) the effect of non-market capabilities toward non market strategies and competitive advantage of SMEs in South Sulawesi; 3) the effect of non-market capabilities toward government intervention. The data used is the primary data which was obtained from interviews with 40 respondents in Makassar, Parepare, Sidenreng Rappang and Bantaeng. The sample from which data collection done is selected using purposive sampling method. Results are presented in descriptive and inferential statistics. The research results show that innovation, government intervention, nonmarket strategies and capabilities are prerequisite to improve SMEs competitiveness. In addition, the small businesss competitiveness will significantly change when the innovations undertaken are influenced by government intervention. Normal 0 false false false IN X-NONE X-NONE

Engaging Stakeholders Through Corporate Political Activity: Insights From MNE Nonmarket Strategy in an Emerging African Market

As interest increases in the political engagement between multinational enterprises (MNEs) and emerging economy host governments, less is known about wider MNE stakeholder engagement and the development of nonmarket capabilities in institutionally fragile environments. This study investigates how MNEs engage stakeholders through corporate political activity (CPA) during the pro-market reform of Uganda’s electricity generation sector. Data is collected through semi-structured interviews, archival materials and fieldwork notes, and is analyzed using an NVivo-supported grounded analytic method. We find both proactive and reactive leveraging of CPA to manage diverse stakeholders. We argue that the host government remains the most important political stakeholder in the early phases of reform, but changes in institutional and political environments necessitate strategic adaptations as the reform process progresses. These adaptations include the need for local engagement and the accommodation of multi-level stakeholder pressures. Our findings contribute to an understanding of corporate political capabilities in Africa’s emerging markets, and illustrate how these capabilities can be strategically leveraged to effectively manage diverse stakeholders.

The moderating effect of efficiency and non-market capability in relationship between government involvement and resources to performance of water supply companies (PDAM) in Sulawesi, Indonesia

PurposeThis paper aims to investigate the moderating effect of efficiency and non-market capability in the relationship between government involvement and resources to performance of water supply companies (PDAM) in Sulawesi, Indonesia.Design/methodology/approachThis paper is explanatory in nature, i.e. it explains the relationship (causality) between the external environment variables (government involvement), internal environment variables (resources and non-market capabilities) and the performance of taps in Sulawesi through hypothesis testing. The research was conducted in six provinces in the northern peninsula of Sulawesi Island: North Sulawesi Province, Gorontalo Province, Central Sulawesi Province, Southeast Sulawesi Province, South Sulawesi Province and West Sulawesi Province. The research was undertaken from September 2011 to December 2011. The analysis unit in this research was PDAM, while the research population was the regional water company (PDAM) in Sulawesi. A quantitative approach was used for data analysis, i.e. variance-based inferential statistical analysis with structural equation modeling, known as partial least squares, with variable non-market capability acting as a moderating variable.FindingsGovernment involvement has a significant and positive effect on the performance, indicating that the higher the government involvement, the higher the performance of a company. Efforts to reduce water loss level for PDAM is a strategic move, as they are associated with PDAM’s stakeholders. Water loss will lead to poor customer service, low contribution to the acceptance of regional governments and failure to meet natural conservation programs. On the other hand, to reduce the water loss level, considerable capital is needed for investment, for example, to finance the installation and repair of pipelines, pumps, mains water meter, customer water meter, the cost of water treatment, fuel costs and the expansion of the water source. In general, PDAM in Sulawesi still has problems in terms of expansion because of the lack of funding sources; hence, the role of regional government as the owner is expected, both in the form of financial aid and the tariff adjustment. The government should be in favor of thorough development of drinking water, as embodied in the form of finance, budget commitment and the commitment to the development of PDAM.Research limitations/implicationsThe limitations of this study are that the data used in this study are cross-sectional, so they only describe the condition at a particular time. Also, the sample was limited to Sulawesi taps; therefore, to generalize the findings, a larger sample needs to be considered.Practical implicationsThe practical implications of this study are that development of water supply company cannot be separated from the government’s involvement as one of the stakeholders to improve corporate performance, especially through financial assistance. In connection with it, a board of directors or management of PDAM in every department of a company constantly works on government involvement, especially financial aid to fund or investment fund sharing, to improve service to customers. Such activities run a company aimed at achieving efficiency with emphasis on the efficiency of production and distribution capacity by managing the leakage rate, the emphasis on labor costs by keeping the ratio of employees ideal, the emphasis on aspects of the supply and distribution through control of water resources and water meter mains and water customers and an emphasis on the use of raw materials or chemicals with attention to the quality of raw water.Social implicationsThe social implications of this study are that government interventions are supported by the availability of resources according to the needs able to create efficiencies that have an impact on improving the performance of taps. Companies performing well can operate optimally in providing drinking water that meets health standards. In addition, the performance achieved allows the taps to embody the organization’s mission as a creator of jobs and local revenue for local governments.Originality/valueOriginality for this paper shows the moderating effect of efficiency and non-market capability in the relationship between government involvement and resources to PDAM. The originality also includes the location of this study (six provinces in the northern peninsula of Sulawesi Island: North Sulawesi Province, Gorontalo Province, Central Sulawesi Province, Southeast Sulawesi Province, South Sulawesi Province and West Sulawesi Province) as no previous research has investigated this relationship in this geography.

The Effect of Nonmarket Capabilities on Firm Performance: How Knowledge and Capabilities Accumulated from Nonmarket Arenas Contribute to Firm Performance

This study addresses the existing gap in the nonmarket literature vis-à-vis nonmarket performance effects and the demand for managerial tools to obtain, sustain and transform knowledge of various nonmarket activities into specific nonmarket assets. This paper aims to describe the various nonmarket arenas and to explain how knowledge and capabilities accumulated from different nonmarket arenas contribute to firm performance.

Corporate political activity and location-based advantage: MNE responses to institutional transformation in Uganda’s electricity industry

We examine how multinational enterprises (MNEs) employ political strategies in response to location-based, institutional transformations in new frontier African markets. Specifically, we explore the heterogeneous corporate political activities of advanced and emerging market MNEs in Uganda’s electricity industry, as they respond to and influence locational advantage using diverse political capabilities. We argue that, in institutionally fragile, new frontier markets, Dunning’s OLI paradigm is more theoretically robust and managerially relevant when combined with a political perspective. Effective MNE political strategies in these markets rely on nonmarket capabilities in political stakeholder engagement, community embeddedness, regional understanding, and responsiveness to stages of institutionalization.

Experiential learning about host country non-market environment

In their international expansion, firms with ethnocentric mindsets tend to be trapped in the myopia that believes they can effectively exploit their home-base non-market capabilities in host countries without incurring additional institutional costs. This myopia may impose severe learning barriers when firms enter host countries with lower level of government corruption than home country because they are less likely to learn from their prior failure experience due to the belief that performance in less corrupt host countries would be solely determined by their market capabilities. Drawing on behavioural approach to multinational corporation (MNC) organisational learning, this paper proposes that investments in market capabilities in the home country tend to result in higher rates to enter host countries with lower level of perceived government corruption. In addition, I propose that prior failure experience may not necessarily enhance the survival rates of subsequent entries in host countries with lower level of perceived government corruption than home country.

Global sustainability pressures and strategic choice: The role of firms’ structures and non-market capabilities in selection and implementation of sustainability initiatives

Through the comparative analysis of sustainable development (SD) strategies of three Spanish electric utilities, we explore how differences in electricity production technologies and non-market capabilities of these companies resulted in substantial differences in the degree and nature of their SD involvement over time. This longitudinal study of SD strategies highlights the pluralism of SD commitment interpretations and reveals the non-deterministic nature of SD strategy evolution. While some differences in companies’ strategic choices could be explained by their existing production capacity constraints, the evolution of SD commitment interpretations and SD actions reflect strategic choices grounded in non-market capabilities of the firms.

Market–political ambidexterity during institutional transitions

In emerging economies undergoing institutional transitions, while market forces have grown, government influences are not necessarily in decline. Therefore, in addition to market capabilities, firms also need to develop political and nonmarket capabilities. We argue that firms grow during institutional transitions by developing a set of capabilities that we label market-political ambidexterity to embrace both governments and markets. Viewing market-political ambidexterity as a bundle of dynamic capabilities, we contribute to the literature by articulating this important but previously underexplored construct. [Key words] Ambidexterity, market-political ambidexterity, institutional transitions, emerging economies

Decoupling the Influence on Corporate Political Actions

This study borrows from the structural perspective in industrial organization and strategic management, and integrates the theory of new institutional economics and the theory of nonmarket capabilities to understand the contingency of firms¡¯ pursuit of political strategies. We examine how a firm¡¯s relative nonmarket position – defined as how well the firm is positioned to manage political risks relative to peer firms in the same institutional environment – influences the firm¡¯s use of political strategies. Moreover, we analyze how this relationship is contingent on different institutional contexts. Using survey data from a sample of over 16,000 firms in 37 countries, we demonstrate that firms that are in a less advantageous nonmarket position to shield themselves from the hazards of state predation and private expropriation than their peers are more likely to engage in lobbying and bribery activities, especially in an institutional environment with lower quality market-supporting institutions.

Quantitative Cross-National Sociology and the Methodological Abyss: Comment on Alcacer and Ingram

Previous articleNext article No AccessQuantitative Cross-National Sociology and the Methodological Abyss: Comment on Alcacer and Ingram1Andrew SchrankAndrew SchrankUniversity of New Mexico Search for more articles by this author PDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by American Journal of Sociology Volume 118, Number 4January 2013 Article DOIhttps://doi.org/10.1086/670253 Views: 250Total views on this site Citations: 7Citations are reported from Crossref © 2013 by The University of Chicago. All rights reserved.PDF download Crossref reports the following articles citing this article:Matthew Lange, Emre Amasyali, Tay Jeong Communalizing Colonial Policies and Postcolonial Ethnic Warfare: A Multimethod Analysis of the British Empire, European Journal of Sociology (Nov 2021): 1–43.https://doi.org/10.1017/S0003975621000229Matthew Lange, Tay Jeong, Emre Amasyali The colonial origins of ethnic warfare: Re-examining the impact of communalizing colonial policies in the British and French Empires, International Journal of Comparative Sociology 62, no.22 (Jun 2021): 141–165.https://doi.org/10.1177/00207152211023793Eoin Flaherty, Seán Ó Riain Labour’s declining share of national income in Ireland and Denmark: the national specificities of structural change, Socio-Economic Review 18, no.44 (Jan 2019): 1039–1064.https://doi.org/10.1093/ser/mwy047Joao Albino-Pimentel, Pierre Dussauge, J. Myles Shaver Firm non-market capabilities and the effect of supranational institutional safeguards on the location choice of international investments, Strategic Management Journal 39, no.1010 (Aug 2018): 2770–2793.https://doi.org/10.1002/smj.2927Cheng-Tong Lir Wang, Ralph Ittonen Hosoki From Global to Local, Sociological Perspectives 59, no.33 (May 2016): 561–581.https://doi.org/10.1177/0731121416648936Liam Swiss, Wesley Longhofer Membership Has Its Privileges: Shared International Organizational Affiliation and Foreign Aid Flows, 1978–2010, Social Forces 94, no.44 (Dec 2015): 1769–1793.https://doi.org/10.1093/sf/sov117Chan-ung Park Institutional embeddedness of market integration: The formation of free trade agreements in 1957–2008, International Sociology 30, no.11 (Dec 2014): 39–60.https://doi.org/10.1177/0268580914554116

Higher education and self-governance: the effects of higher education and field of study on voice and agency in Sweden

There is extensive research pointing to the positive effects of education in the form of labour market outcomes. These outcomes are vital when evaluating education; there are however additional outcomes of education that might also be important for quality of life. From this point of view, education could affect non-market areas such as democracy, gender equality and civic engagement. This article investigates the effects of level of education and field of study on two vital non-market capabilities: agency and voice. The study uses an eight-year longitudinal national survey of 1058 Swedish youth, controlling for baseline values of voice and agency. The empirical analysis shows that university education increases young people’s capabilities of voice and agency. Field of study was also found to have a relationship with agency, where social science and business education was found to be connected with the highest probability of agency, whereas there were only small effects of field of education on voice.

Non-market Capabilities and the Prosecution of Trade Remedy Cases in the United States

The study investigates the prosecution of US trade remedy cases as examples of administrative government agency investigations and seeks to identify key capabilities for effective corporate political strategy targeting these institutions. Trade remedy cases are important policy tools, designed to protect domestic firms from ‘unfair’ import competition. The research contributes to the growing literature on corporate political activity and its links with superior outcomes in the marketplace. Three capabilities are identified: the capability to collect market/non-market intelligence, the capability to build and shape the administrative record, and the capability to align business practice with the US trade remedy institutions.