Non-market Forces Research Articles

Chinese Multinationals’ Internationalization Strategies: New Realities, New Pathways

This article discusses how Chinese multinational enterprises internationalize in an era of increasingly fractured globalization. It introduces new perspectives that identify and describe four strategic pathways these multinationals employ while acquiring strategic assets and building and leveraging capabilities to increase value from their international presence. The pathways—bouncing up, down, sideways, and back—depend on the multinationals’ strategies and the evolution of their internationalization. The pathways are distinct yet intertwined and influenced by powerful non-market forces, including geopolitical tensions (U.S.-China rivalry in particular) and Chinese domestic regulatory intervention. These dynamics manifest themselves in globalization, de-globalization, and re-globalization shifts.

An Arendtian perspective on responsibilized heroes: Why marketing needs a new model of heroic action

This paper explains how disadvantaged consumers challenge their subjugated positioning through self-discipline, recursive reflexivity and narration. Although it is possible to interpret their agency as complicit with their responsibilization, viewing responsibilized consumers’ entanglement in dynamic market formation as complicity in their disadvantage forecloses on their ability to resist. Instead, this paper argues resistance at the human level involves subjectivation processes according to different spatiotemporal logics. This means resistance paradoxically resembles conformity within a heroic path of resistance against their social disadvantage. Drawing on Arendt’s (1958) categorization of human activities helps surface the politics of resistance at the human level from self-interest to collective interest and social change. The findings suggest theoretical realignment is needed to (1) delineate the limits of responsibilization to adequately explain heterogeneous types of self-discipline within subjectivation processes; and (2) expose the spatiotemporal and political nature of compliance and resistance to market and non-market forces.

Corporate lobbying and product recalls: an investigation in the U.S. medical device industry

While corporate political activity is increasing, its effects on firms’ marketing-relevant outcomes have been largely overlooked in the literature. We propose that corporate lobbying will decrease a firm’s emphasis on product safety and, in turn, increase its product recalls. We further propose that the positive indirect effect of corporate lobbying on a firm’s product recalls via lower emphasis on product safety will be moderated by the firm’s (a) CEO’s functional background and (b) focus on radical (vs. incremental) innovation. We provide empirical support for the proposed model using data on 86 U.S. medical device firms from 2005–2018. The findings extend the literature on the effects of non-market forces on firms’ marketing-relevant outcomes. They also extend the literature on the antecedents of product recalls, which has, hitherto, overlooked the role of non-market forces. The findings on the moderating roles of the firm’s marketing CEO and focus on radical (vs. incremental) innovation generate actionable managerial implications.

The barriers of identity: Population diversity, social trust, and crime

Based on the 2014 China Labor-force Dynamics Survey data, this paper constructs a population diversity index to test the impact of population diversity on crime rates. The results suggest that population diversity is one of the causes of increasing urban crime. After considering the endogeneity problem and testing the robustness from different perspectives, the conclusion remains unchanged. The results of mediation tests indicate that social trust is an important mediator variable, that is, population diversity leads to an increase of crime rate when the level of social trust is low. Moreover, the results also show that the impact of population diversity on crime is much weaker when property rights protections are more complete, people have more confidence in the court system, and the government spends more on education and social security. This shows that better institutions can, to some extent, replace the role of non-market forces, thereby curbing the negative impact of population diversity on crime rates. It also suggests that public expenditure can reduce the likelihood of crime by increasing the opportunity cost of crime. This paper provides empirical evidence valuable to government crime control policies in China. Governments at all levels should pay full attention to the adverse effects of cultural differences in governance and promote mutual cultural recognition and integration of different groups.

Imposing versus Enacting Commitments for the Long‐Term Energy Transition: Perspectives from the Firm

Imposing versus Enacting Commitments for the Long‐Term Energy Transition: Perspectives from the Firm

Non-market forces significantly affect oil prices

Non-market effects, such as strategic decisions by the Organization of the Petroleum Exporting Countries, energy legislation and speculative bubbles, move crude oil prices away from the level implied by supply and demand for extended periods. These effects should be more proactively monitored and regulated to suit national and international objectives.

»Abwanderung und Widerspruch«. Zur Aktualität eines analytischen Konzepts des 20. für das 21. Jahrhundert

Abstract Albert O. Hirschman’s Exit, Voice, and Loyalty. Responses to Decline in Firms, Organizations, and States (1970, in German 1974) deconstructs a stereotype of economic behavior that large parts of social sciences define and analyze as rational and goal-oriented. Hirschman confronts the image of a rational and efficient economy, constantly working towards maximizing output, with the fluctuation and deterioration of its performance. Exit and Voice constitute, according to Hirschman, the fundamental mechanisms available to counteract this tendency for performance decline. He introduces market and non-market forces into his analysis, thereby addressing both economic and political mechanisms, in order to advance the mutual recognition of both disciplines, which Hirschman deems insufficient. At the time of its publication, Hirschman’s study was appreciated for its cross-disciplinary approach. In the eyes of the author however, what grants the book current relevance is its analytical compatibility with devastating present-day problems.

Top Management Team Power in China: Measurement and an Application

We propose and validate a comprehensive measure of power for the top management teams (TMTs) of publicly listed Chinese firms. We show that our measure is positively associated with the four power dimensions developed by prior research for U.S. firms as well as three Asia-relevant power dimensions, including political capital, seniority and gender. We find that our TMT power measure is a valid proxy for TMT power for both state-controlled firms and non-state-controlled firms. We also compare our TMT power measure with one alternative TMT power proxy based on executive compensation and find no evidence that the alternative proxy is better than our measure in capturing TMT’s true power. Further, we provide evidence that the divergence between our power proxy and the power proxy based on executive compensation reflects nonmarket institutional forces in China and has important implications for corporate outcomes.

‘Wholesome regulation and unlimited freedom’: governing market space in southern Ireland before the Famine

ABSTRACT:This article addresses efforts to reform market activity in pre-Famine Ireland, exploring Karl Polanyi's assertion that the ‘free market’ required ‘the intervention of the state in order to establish it’. It begins by rooting Ireland's alleged ‘social ills’ – over-population and subsistence agriculture – in terms of integration into international markets from the mid-eighteenth century. From the crisis of the 1820s, state actors came to see the extension of the cash economy as central to remedying these ‘ills’. Altering the physical fabric of exchange to encourage ‘rational’ market behaviour, I argue reformers aimed to ‘enclose’ commercial spaces economically and physically from non-market forces. Utilizing novel technologies of vision and precision, market space could thus operate according to a logic and ethics of its own, inculcating voluntary compliance through new standards of ‘trust’ and ‘fairness’. I conclude by asking, if indeed the state had come to operate as much through ‘freedom’ as force by 1845, how we might begin to reassess the course and context of the Irish Famine.

Love plastic: Ashiyana Pipe’s journey to redefine the positioning of plastic

Subject area The case specifically discusses the role of stakeholders and non-market forces and how they can potentially influence the strategic choices of firms. Participants need to have some basic understanding of non-market forces, and stakeholder theory. The case is suitable for courses on sustainable supply chain management, closed loop supply chain management, reverse logistics, green business, environmental management, strategic management and business in emerging economies. Study level/applicability The target audiences for the case are bachelor and first-year MBA students and trainees who are interested in learning the relevance of non-market forces in sustainable growth of an industry and the importance of stakeholder management in the smooth conduct of business. Case overview The case study details how the plastic industry in Kerala faces a non-market threat and how it affects the progress of the industry by using the example of Ashiyana Pipe. Though plastic is a unique material by virtue of its reusability and non-perishable characteristics, it has invited a lot of criticism, as there is a wide spread perception regarding its detrimental impact on the environment (such as choking drains, preventing the degradation of solid waste because of its impermeability, etc.). But the reason for experiencing the detrimental impact of plastic can also be attributed to the inability of the supply chain of the plastic industry to reach a closed-loop status, especially in developing countries such as India, as all categories of post-consumer plastic are not reaching recycling plants. Lack of awareness, lack of community participation in proper segregation and aggregation at the source, absence of incentive systems, weak regulations and poor monitoring are discussed as the common barriers hindering the achievement of closed loop status of plastic supply chain. Detailing the barriers, the case study explains the failure of informal and formal recycling markets in Kerala. Finally, the case study proposes a model with involvement of all the key stakeholders to reposition the hate toward plastic into love through recycling initiatives. Expected learning outcomes Expected learning outcomes of the case are listed below: illustrate the importance of stakeholder involvement in achieving a sustainable business and to stress the importance of a decentralized approach. Illustrate the relevance of non-market forces in sustainable growth of an industry that has significant impact on the surrounding environment and society. Critically analyze the existing business models (based on market mechanism) and suggest possible improvements and alternatives. Understand the challenges that will be faced while implementing an inclusive model with involvement of all stakeholders to reduce the negative impact of non-market forces. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes. Subject code CSS 11: Strategy.

한국과 일본 화학산업에서 사업 포트폴리오와 R&D가 경영성과에 미치는 영향

The Korean chemical industry has been one of the heavy industrial sectors to boost Korean economy during the past three decades. In the early 2010s, the Korean chemical firms faced significant challenges due to global overcapacity and rising competition from China and Middle East countries. The current downturn of Korean chemical industry comes from internal factors on strategic choice, not from global business cycle. In September of 2016, Ministry of Trade, Industry and Energy recommended the necessity of cutting the production of four items - Terephthalic acid(TPA), polystyrene(PS), synthetic rubber(SBR) and PVC. Meanwhile, in 1959, Japan, known as the Triad with the US and Western Europe controlled the global chemical industry. However, by the 1990s, with the emergence and growth of companies based in Korea, Taiwan and China, Japan struggled through a lost decade that continued into the 2000s. Although Japanese chemical companies have lagged behind companies in the West in adjusting to new business realities, many companies have already taken significant steps to increase their competitive advantage through restructuring, consolidation and new research. Industry level change inevitably requires a company to fundamentally rethink its strategy and business model. What is the value strategy for the Korean chemical firms to sustain their competitive advantages under uncertainty associated with a strategic infection point (SIP)? A SIP is a critical period during which major threats as well as new opportunities come about. This paper addresses this key question by examining the following issues. Firstly, our study diagnoses whether the current chemical industry in Korea and Japan confronts a SIP on the basis of adapted seven forces model consisting of market forces - the five forces framework of traditional industry analysis and complementors - as well as nonmarket forces associated with technology and government regulation. Secondly, we examine the different adaptation strategies between the most profitable and non-profitable chemical companies in Korea and Japan in light of segment portfolio and R&D using case studies. Lastly, we conduct an empirical study to classify Korean and Japanese chemical companies into three groups by application of cluster analysis. Segment portfolio and R&D are of interest as independent variables because they have been linked to value creation, whereas operating income, as a dependent variable is an external signal to indicate each firm`s financial performance. The data set used in descriptive statistics and cluster analysis comes from DART (Data Analysis, Retrieval and Transfer System) and annual reports of 44 Korean and Japanese chemical firms from 2000 to 2016. Our results show that there exists a significant gap of operating income among three groups, i.e. a high performance group makes known by diversifying segment portfolio into high value-added specialty materials with strong R&D capability. This group consists of most Japanese firms specialized in chemical materials. However, no Korean firm was found there. Our findings suggest that Korean chemical firms are called for in the process of strategic transformation to improve portfolio with value-added specialty by enhancing in-house R&D capability and acquiring specialty business. In order to step out of the pending crisis, Korean chemical companies should shift their growth strategy paradigm in the global market. A SIP signals the timing to change. Transformation involves rapidly and radically changing each firm`s strategy. A key task of top management is to recognize ambiguous and conflicting signals of a SIP, adapt to a new business model and develop new value strategy. Their new resolve must be followed by changes in resource allocation. It is expected that this study can be applied to other heavy industries, e.g. shipbuilding, automobile and steel that underpinned Korea`s past growth.

Institutional Pressures and Organizational Characteristics: The Case of Polluting Emissions and the Toxics Release Inventory

This article develops a model that demonstrates how organizational characteristics moderate institutional pressures on firms that report annually to the Toxics Release Inventory. In terms of institutional pressures, market forces, non-market forces and regulatory demands influence environmental practices at the plant level. Organizational characteristics of the firm, including firm size, competitive position and degree of internationalization moderate these influences, leading to a firm’s corporate environmental performance. The article finds that firms may voluntarily over-comply with the existing regulation when such action aligns with existing corporate strategies and culture, reducing the possibility of stricter regulation and enhancing a socially responsible reputation. JEL: Q52, Q58, H32, M14, M21

Can companies buy legitimacy? Using corporate political strategies to offset negative corporate social responsibility records

Purpose– Organizational legitimacy is greatly influenced by firm corporate social responsibility (CSR) records. An organization with a poor CSR record can either try to improve its practices or attempt to manipulate institutional norms and belief systems in order to convince the society that its practices are acceptable. The authors argue that firms’ corporate political strategies (CPS) – attempts by firms to influence public policy outcomes in a favorable way – can be very effective in shaping legitimacy norms and offsetting negative public image. The purpose of this paper is to draw on institutional theory and propose that firms with negative CSR records consider investing in political strategies necessary in order to construct new legitimate standards in line with their strategies.Design/methodology/approach– The authors test the hypotheses on 348 manufacturing firms using data from “The Center for Responsive Politics.” MSCI (formerly known as KLD) and COMPUSTAT. Research methodology used to test hypotheses is hierarchical ordinary least square regression analysis.Findings– The authors find that firms with high CSR concerns invest more in CPSs. In addition, the results indicate that organizational visibility and organizational slack positively moderate this relationship. In other words, visible firms and firms with high organizational slack invest more in CPSs if they are facing CSR concerns compared to firms that are less visible and with less organizational slack.Research limitations/implications– In this paper, the authors focus on the corporate governance dimension of CSR. Although focussing on the negative corporate governance practices gives us an opportunity to have a more focused approach, there are other important aspects of CSR such as environmental practices, employment issues, and accounting practices that are not addressed in this study.Practical implications– This paper can serve as a testament to the value of investing in political strategies to the practitioners. The results indicate that firms can manage their image and reputation through political spending and this is especially true for firms that are more visible and have more organizational slack.Originality/value– Much of the previous literature explores the relationship between market factors such as financial status of the firm and political strategies. This paper contributes to the literature by showing that other non-market forces such as poor social standing can also motivate companies to invest in political strategies.

State advances and private retreats? — Evidence of aggregate productivity decomposition in China

This paper is motivated by the recent debate on the existence and scale of China's ‘Guo Jin Min Tui’ phenomenon, which is often translated as ‘the state sector advances and the private sector retreats’. We argue that the profound implication of an advancing state sector is not the size expansion of the state ownership in the economy per se, but the likely retardation of the development of the already financially constrained private sector and the issues around the sustainability of the already weakening Chinese economy growth. Drawing on recent methodological advances, we provide a critical analysis of the contributions of the state and non-state sectors in the aggregate Total Factor Productivity and its growth over the period of 1998–2007 to verify the existence of GJMT and its possible impacts on Chinese economic growth. Overall, we find strong and consistent evidence of a systematic and worsening resource misallocation within the state sector and/or between the state sectors and private sectors over time. This suggests that non-market forces allow resources to be driven away from their competitive market allocation and towards the inefficient state sector.

Gauging the Market and Non-Market Forces in Indian Aquaculture Industry for a Strategic Position in Fish Vaccines Market

Indian aquaculture segment has become a growth engine for the agriculture sector and is postulated to be one of the key sources of food-protein supporting the growing Indian population. Significant potential for new fish vaccine business was demonstrated previously using market and sales potential assessments; however, in addition to the overall market attractiveness, estimating the market and non-market forces in an industry is vital to ensure profitability in a new business. Therefore, this research directed attention to gauging the forces using Porter’s five market forces (2008) and Prasad’s (2011) non-market forces (national culture and history) framework together with measuring the benefits of complementors. Each of the forces was measured and key drivers within each force were identified. A base case revenue scenario was built on forecasts and the impact of the major forces was tied to the income statement to determine sensitivity of the revenue forecasts. The results suggest that the buyer power and the substitute power are the major competitive forces. The power of complementor products was also found significant and an entrant could counter the predicted losses in profitability due to influences of these market and non-market forces by providing product-product bundles thus reaping considerable improvements in net present value (NPV) and internal rate of returns (IRR) on investments. The NPV from this analysis thus yielded a range between $0.97 and $7.5 million with an IRR ranging between 29.9% and 35.8% depending on the variables considered in the sensitivity analysis. Therefore, to realize profit potential and many other advantages, the entrant may choose a strategy of reaching the customer with a solution package either by producing complementors internally or by joining hands with strategic partners in the industry.

Structural Evaluation of Institutional Bias in China's Urban Housing: The Case of Guangzhou

Institutional bias is an important topic in social justice and the presence of institutional bias is widely recognized in China's urban housing sector. This paper proposes a new framework for measuring and assessing institutional bias in China's urban housing system based on structural equation modeling and the Pratt index of relative importance for linear regression. The proposed framework analyzes the structural pathways through which nonmarket institutional forces affect housing, and provides quantitative measures to evaluate both the direct and the indirect effects of biased institutions on housing outcomes. A case study of Guangzhou is presented to demonstrate the proposed ideas and methods using first-hand household survey data collected in 2009. The results of the case study show the dominance of institutional effects over market effects on housing outcomes through direct and indirect pathways. The results also show that, although institutional forces affect most subjective and objective measures of housing outcomes, they induce the largest effects on homeownership attainment and physical housing conditions. This suggests that, at this stage, property ownership and material housing well-being are two potential central areas of China's housing justice.

Multinational enterprises and climate change: Exploring institutional failures and embeddedness

This paper explores how climate change affects multinational enterprises (MNEs), focusing on the challenges they face in overcoming liabilities and filling institutional voids related to the issue. Climate change is characterized by institutional failures, because there is neither an enforceable global agreement nor a market morality. Climate change is also a distinctive international business issue, as its institutional failures materialize differently in different countries. As governments are still highly involved, MNEs need to consider carefully their strategies to cope with non-market forces, including their embeddedness in multiple institutional settings. Using some illustrative examples of MNE responses to climate-related components in stimulus packages, we explore MNEs’ balancing act concerning their institutional embeddedness (or lack thereof) in home, host and supranational contexts as input for further research on the dynamics of MNE activities in relation to climate change.

Can increases in the cigarette tax rate be linked to cigarette retail prices? Solving mysteries related to the cigarette pricing mechanism in China

ObjectiveTo explain China's cigarette pricing mechanism and the role of the Chinese State Tobacco Monopoly Administration (STMA) on cigarette pricing and taxation.MethodsPublished government tobacco tax documentation and statistics published by...

Profiting from Environmental Regulatory Uncertainty: Integrated Strategies for Competitive Advantage

This article offers two integrated strategies managers can use in the face of environmental regulatory uncertainty. As integrated strategies, they both recognize non-market forces while taking into account market realities. Advocating for pragmatic, progressive policies enables firms to shape future policy around existing environmental strengths; this strategy raises competitors' costs when competitors have yet to develop identical competencies. Systematically embracing advancing regulation enables firms to satisfy activists who are pressuring policymakers to force firms to conform to higher environmental standards in other jurisdictions; this strategy allows managers to adapt to coming regulation at their own pace while leveraging market competencies. This article presents four case studies that highlight how some firms have implemented these strategies, and why some have been successful at mitigating regulatory uncertainty and some have not.

Staying Ahead of and Profiting from Environmental Regulatory Uncertainty: Integrated Strategies for Competitive Advantage

We offer two integrated strategies managers can use in the face of regulatory uncertainty vis-a-vis the natural environment. As integrated strategies, they both recognize non-market forces while taking into account market realities. Advocating for Pragmatic, Progressive Policy enables firms to shape future policy around existing environmental strengths; this strategy tips the scale towards a winning position by raising competitors’ costs when competitors have yet to develop identical competencies. Systematically Embracing Advancing Regulation enables firms to satisfy activists who would place pressure on policymakers to force firms to conform to higher environmental standards in other jurisdictions; this strategy tips the scale towards a winning position by allowing managers to adapt to coming regulation at their own pace while leveraging market competencies. We begin by presenting a brief framework that assembles the building blocks necessary to justify when, how, and why our strategies reduce vulnerabilities to regulatory uncertainty. We then present four case studies that highlight how some firms have implemented these strategies. In the analysis of these cases, we illustrate the conditions under which some have been successful at mitigating regulatory uncertainty and some have not.