Ownership Advantages Research Articles

Tax Incentive Mediates Foreign Direct Investment Determinants and Hotel Performance in Arusha Tanzania

This study seeks to explain the mediation effect of tax incentives on the relationship between ownership advantage (OWA), location advantage (LA), and internationalization (INT) factors determining Foreign direct investment (FDI) on hotel performance (HP). The study proposes the mediation model of tax incentives and FDI toward hotel performance in the Arusha region, of Tanzania. The proposed order of the model is that foreign direct investment depends on OWA, LA, and INT which may become applicable through tax incentives and tax incentives may further predict hotel performance. The measurement scale was borrowed from different studies and responded Includes hotel owners, managers, executive officers, and employees. Data were collected from August 2022 to February 2023; whereby 257 filled questionnaires were gathered and 236 were usable for further analysis. Final questionnaires were analyzed using SPSS and Structural Equation Modeling (SEM). The findings support that tax incentive fully mediates the relationship between ownership advantage and FDI toward hotel performance and partially mediates location advantage and internationalization on FDI investments toward hotel performance. The paper strengthens theoretical arguments by indicating the mediation effect of tax incentives on the relationship between the determinant of FDI, OWA, LA, INT, ICT, and hotel performance. Thus, this study adds to the literature as it has confirmed the eclectic paradigm theory.

Optimization of Financial Management for Enhancing the Electric Vehicle Market in Medan, Indonesia

Abstract The global shift towards sustainable transportation, exemplified by the increasing adoption of Electric Vehicles (EVs), represents a vital response to contemporary environmental and energy challenges. This study investigates the determinants of consumers’ Desire to Purchase EVs within the unique context of the Medan market, where consumer preferences and market dynamics differ from more globally examined settings. Additionally, it explores the mediating roles of Consumer Awareness Campaigns and Local Industry Partnerships in shaping purchase intent. Through a comprehensive survey of 832 respondents in Medan, Indonesia, the study reveals crucial insights. Government incentives, including tax breaks and rebates, emerge as influential factors, significantly increasing consumers’ inclination to adopt EVs. Equally vital is the accessibility and availability of charging infrastructure, which is pivotal in bolstering consumer confidence in EVs. Consumer perceptions and attitudes have a significant bearing on purchase intent, with positive perceptions regarding environmental benefits, cost savings, and driving experiences contributing to the heightened desire for EV ownership. Effective financial management strategies also play a positive role, emphasizing the significance of sound financial planning and resource allocation. Further-more, this research emphasizes the instrumental role of Consumer Awareness Campaigns in shaping purchase intent. These campaigns are a powerful tool for elucidating the multifaceted advantages of EV ownership, encompassing environmental consciousness, economic feasibility, and enhanced driving experiences. Local Industry Partnerships within the Medan EV market equally contribute to heightened purchase intent, reflecting the synergistic effects of collaborative initiatives.

Analysis of the Motives and Risk Countermeasures for Cross-Border Mergers and Acquisitions of Agrochemical Companies Based on OLI Model

Nowadays, agrochemical companies are facing challenges such as fluctuations in supply and demand, intense market competition, and declining product prices, which have led to varying degrees of performance decline. At the same time, high-quality undervalued companies in the international market are attracting more and more Chinese companies to step into the global market in search of new growth opportunities through cross-border mergers and acquisitions. This paper, based on the OLI model, analyzes the motives of mergers and acquisitions from three aspects: ownership advantages, location advantages, and internalization advantages. It discusses the potential risks in the merger and acquisition process and preventive measures, and proposes relevant conclusions based on this.

Does The Governance Model of Husband-and-Wife Shareholding Lead to Underinvestment?

This paper explores the extent to which joint shareholding by husband and wife affects underinvestment in family firms by establishing a multiple regression model based on the family firm-specific socio-emotional wealth theory perspective. It is found that joint spousal shareholding can alleviate the underinvestment of family firms to a certain extent, and it is also found that the underinvestment can be further alleviated when the important positions in family firms have technical backgrounds as well as when the family firms actively undertake social responsibilities. The results of this paper suggest that family firms should utilize the advantages of joint ownership in the future, which is conducive to the long-term development of the enterprise

Foreign direct investment from Japan, South Korea and China in the Czech Republic: A comparative analysis

Multinational companies from Japan, South Korea and China began to actively penetrate Czech market starting from the mid-1990s. By 2021, Japan was the leader in terms of foreign direct investment stock in the Czech Republic ($ 4.7 billion), followed by South Korea ($ 3.4 billion); and China ($ 760 million). The methodological basis of the paper is Dunning’s eclectic paradigm, which makes it possible to explain foreign investment activities from the point of view of the simultaneous availability in these processes of ownership, location and internalization advantages. As a result of a comparative analysis, the author comes to the following conclusions. In the processes of activity of foreign affiliates of Asian companies in the Czech Republic (as part of the implementation of existing ownership advantages), the following features were identified: concentration on the main field of activity of the parent company; concentration of activity in those industries that are most developed in the Czech Republic (industry agglomeration effect); clustering of affiliates around the leading company and main activity; diversification of the activities of foreign affiliates by supplementing the main activities of the parent company with the activities in related sectors. To explain the weak presence of Chinese MNCs in the Czech market and the more deep activity of South Korean and Japanese MNCs, a “wedge-shaped” foreign market entry was proposed; it is based on the idea of internalization advantages of. The leading company represents a spearhead of the “wedge-shaped” foreign market entry. A large MNC possesses powerful and well-developed ownership advantages. It is the first to enter foreign market in the sector that is main one for its activity in the national market; and it is followed by foreign affiliates operating in the main and related sectors in a kind of expanding “wedge”. It is the penetration that enables MNCs to gain a foothold in the market, leveraging both ownership, location and internalization advantages.

Can environmental, social, and governance performance drive two-way foreign direct investment behavior? Evidence from Chinese listed companies

The topics of companies' Environmental, Social, and Governance (ESG) performance and two-way Foreign Direct Investment (FDI) behavior are gaining prominence in China. Analyzing the relationship between ESG performance and two-way FDI behavior can guide companies towards adopting green and open practices. This study covers the period from 2009 to 2022, focusing on 2022 listed companies using unbalanced panel data with 13,365 observations. The results establish that a company's ESG performance significantly contributes to its two-way FDI behavior. Endogeneity analysis and robustness checks are consistent with the baseline regression findings. Non-state owned enterprises, large companies, and non-high-tech companies particularly benefit from ESG performance in their two-way FDI behavior. The COVID-19 pandemic likely amplified the significance of ESG factors in the decision-making process for two-way FDI behavior. Mechanism analysis indicates that ESG performance promotes innovation and efficiency, enhancing companies' ownership advantage. Additionally, ESG performance could enhance companies' reputation and bring information symmetry advantages. The study presents evidence that ESG performance acts as a substitute for digital transformation in driving companies' two-way FDI behavior. These three mechanisms contribute to a greater likelihood of two-way FDI behavior. These findings are of significant importance to both businesses and policymakers, guiding companies toward adopting more environmentally friendly and open practices, thereby promoting sustainable development and fostering growth in two-way FDI.

Lubricating Institutional Friction: How Ownership Advantage Shape Location Choice of Business Groups

Lubricating Institutional Friction: How Ownership Advantage Shape Location Choice of Business Groups

INTERNATIONALIZATION OF EMERGING MARKET FIRMS: IMPACTS OF BUSINESS GROUP AFFILIATION AND OWNERSHIP CONCENTRATION IN TURKEY CONTEXT

Emerging market firms are known for their lack of ownership advantages for internationalization. For this reason, most of them should search for these advantages in foreign markets. On the other hand, emerging market firms have specific governance structures which can facilitate some ownership advantages to internationalize. This study proposes that emerging market firms could also have ownership advantages at a threshold level that enhance their internationalization level. Moreover, business group affiliation and ownership concentration would have moderating roles in this positive relation. Accordingly, World Bank Enterprise Surveys database is used for sample formation. Hypotheses of the study are tested with a sample of Turkish firms that cover 4159 firm-year observations between 2008-2019. According to statistical findings, a negative relationship between ownership advantages and internationalization level is found for emerging market firms. However, there is no significant moderating effects of business group affiliation and ownership concentration.

Policies to support the internationalisation of latecomer science-based firms: the experience of large Brazilian pharmaceutical companies

PurposeThis study aims to analyse how different types of public policies have supported the internationalisation of latecomer science-based firms, taking the case of large Brazilian pharmaceutical companies (LBPCs).Design/methodology/approachThe methodology comprises a multiple case study and uses a literature review, fieldwork interviews and document analysis of eight LBPCs, five policymakers and three sector experts.FindingsDirect and indirect policies differ in supporting LBPCs’ internationalisation motivation. The indirect policies created the necessary conditions to accumulate knowledge and capacity in the domestic market. LBPCs that adhere more to policies supporting production and technological capabilities development are internationalising as an extension of their innovative efforts. In contrast, LBPCs that have built productive capacities and have not yet reached a minimum level of technological capacity go abroad to exploit their production capabilities with the support of direct policies.Originality/valueThis study contributes to international business and evolutionary literature, demonstrating the channels through which public policies support latecomer science-based firms. The results show that direct and indirect policies assist firms’ internationalisation in different ways, according to actors’ perception: providing support to strengthen their domestic capabilities, which have become competitive advantages in the international market; or offering support to external expansion. It emphasises that industrial policies are relevant to support companies in creating the initial conditions (ownership advantages) to internationalise, and direct policies are important to help companies to design international strategies. This study also debates that policies supporting companies’ internationalisation depend on their adhesion to programmes and incentives and their routines and capabilities, which are specific to each company and lead to different motivations for international expansion.

Configurational framework of learning conduits used by emerging economy firms to improve their innovation performance

The past decade has seen a dramatic increase in innovation coming from emerging economy firms. In response to this popular phenomenon, scholars are examining many learning conduits used by these firms to improve their innovation performance. The various learning conduits used by these firms include technology licensing, government R&D support, university-firm linkages, business groups, government affiliation, outward FDI, international collaborations, inward FDI, outsourcing, exporting, and importing. Building on a systematic review of 115 papers on this topic, we find this literature to be unstructured, with no organizing framework. To help researchers take stock and make advancements, we use configurational theorizing to develop a framework that helps understand when and why these emerging economy firms tend to use the different learning conduits. Specifically, we propose that the choice of learning conduits is often driven by two key factors: the relative level of institutional formality of the emerging economy and the relative level of traditional ownership advantages of these firms. Building on these two dimensions, we classify emerging economy firms into four configurations: social network focused firms, laggard firms, leader firms, and cutting-edge firms. We generate new insights based on our framework and overview of the existing studies, identify gaps in the literature, and make recommendations about how to extend this growing stream of research.

Hot Topics and Current Issues Related to Aircraft Ownership, Cost Sharing, and a Case in Point if the Law is Not Followed

This paper will explore the issues encountered when multiple users and/or entities purchase or sell an aircraft for business or personal use, which commonly involve the navigation of and compliance with Federal Aviation Administration (FAA) and Internal Revenue Service (IRS) regulations and accompanying federal statutes. This paper will also address the ownership of aircraft by multiple individuals and/or entities, and then operations under various ownership structures. Where multiple aircraft owners are involved, the utilization of dry leases, time sharing agreements, interchange agreements, and co-owner/joint-ownership agreements may be used to navigate FAA and IRS regulations and rules. Also, co-owning an aircraft, but not actually having “ownership” of the aircraft, through another company (an off balance sheet entity for example) will be addressed. Aircraft owned through an owner trust can also provide anonymity, ownership advantages, and can help navigate ownership registration issues. This paper will also address the U.S. Eastern District Federal Court Criminal Organized Crime and Drug Task Force Enforcement prosecution case against an aviation escrow, title, and trust company; along with the principals of those companies, which involved aircraft registration, sale, and ownership issues.

Study on the Impact of Host Country ICT Development Level on China's OFDI Efficiency

The connotation of ownership advantages driving Chinese OFDI in the context of the IT revolution has changed significantly, and the level of ICT development in host countries may become a new type of locational advantage to attract foreign investment. In this paper, we investigate the impact of host country ICT advantage on Chinese OFDI and measure the efficiency of Chinese investment in 108 host countries from 2006 to 2015 with the help of the time-varying stochastic frontier gravity model, and empirically test the factors affecting investment efficiency, focusing on the impact of host country ICT development level on Chinese OFDI efficiency. It is found that overall the level of ICT development in host countries promotes the efficiency of Chinese OFDI; after distinguishing the sample into developed and developing countries, the level of ICT development in host countries has a differential impact effect on the efficiency of Chinese OFDI. This study helps us to better understand the relationship between Chinese OFDI and the ICT development level of host countries, and it has important insights for constructing new advantages in outward investment cooperation and improving the efficiency of outward FDI.

Climate risk, climate risk distance and foreign direct investment

PurposeClimate risk greatly increases the risk exposure of global investments. Both the climate risks of home countries and host countries may affect international investment behaviors. The purpose of this paper is to explore the impact of climate risk and climate risk distance on foreign direct investment (FDI) inflows and outflows. Targeted proposals are provided to promote international economic and trade cooperation and the authors provide suggestions for the FDI strategies of multinational enterprises.Design/methodology/approachThe authors define “climate risk distance” as the difference in climate risks between two countries. This paper uses both a theoretical model and a generalized least squares test to investigate the impact of climate risk distance on FDI from the perspectives of FDI inflows and outflows. In addition, the authors subdivide the samples according to the sign of climate risk distance and rank the FDI share from home country to host country into four groups according to the host country’s climate risk index. Finally, the authors undertake empirical tests with outward foreign direct investment (OFDI) data to support the empirical results.FindingsInvestors from countries with low climate risks have the upper hand due to their competitive advantages, like their skills, trademarks and patent rights, which they can transfer abroad to offset the disadvantage of being non-native. This is generally defined as ownership advantage. The impact of climate risk distance on FDI depends on the sign of climate risk distance. Specifically, host countries with higher climate risks compared with the climate risk levels of home countries may experience insignificant reductions in FDI inflows. For investors from home countries with higher climate risks, they are less likely to invest in host countries with lower climate risks. The results for samples from emerging market economies are shown to be more significant.Originality/valueThis study advances the O (ownership advantage) part of the ownership, location and internationalization (OLI) paradigm by incorporating the climate risk distance between the home country and the host country into the influencing factors of FDI. Both the O part and the L (location advantage, the advantage that host countries offers to make internationalization worthwhile to undertake FDI) part of the OLI paradigm concerning climate risks are validated with FDI and OFDI data.

Foreign Direct Investments in Africa: Are Chinese investors different?

In light of the upsurge in Chinese investments in Africa since Deng’s “Go Global” policy, we study whether the location choices of greenfield investors in Africa differ between Chinese and non-Chinese firms. We focus on risk- and information-related factors, i.e., investment protection provided by investment agreements and country-of-origin, industry, and internal agglomeration. We argue that Chinese firms enjoy ownership advantages that reduce their concern for risk. Our results show that Chinese firms are less sensitive to risk-mitigating factors compared to firms from advanced and other emerging economies. A lower reliance on internal agglomeration emerges as their distinctive trait in internationalization. We attribute this result to the systemic engagement of the Chinese government, which goes beyond state ownership and reduces the “liability of foreignness”. Chinese firms also appear more market-seeking and manufacturing-oriented, aggressively pursuing knowledge spillovers. Contrary to common perceptions, they do not seem distinctively resource-seeking or to pursue unstable countries.

Sailing through the storm – performance of Russian manufacturing subsidiaries of multinational corporations in the first year of the COVID-19 pandemic

ABSTRACT The aim of this study is to depict the performance of Russian manufacturing subsidiaries of multinational corporations during the first year of the COVID-19 pandemic. Using a unique handcrafted database of financial reports from 259 subsidiaries for 2019 and 2020, we retraced three indicators of business robustness: the dynamics of revenues, positive profitability, and the level of financial solvency. Most of the studied subsidiaries (85%) were able to withstand the crisis and maintain satisfactory financial solvency. Revenues decreased in 2020 to 40% of the studied subsidiaries, and the share of loss-making subsidiaries reached 31%. However, more than 40% of the studied subsidiaries achieved both an increase in revenues and positive profitability of sales in 2020. In this respect we may assess the level of ‘ownership advantage’ of multinational corporations regarding assisting their subsidiaries to achieve different elements of business robustness during the pandemic.

The Emergence of Resources Seeking Chinese Firms’ Specific Advantages in Emerging Market

It is argued that the role of the Chinese government to support the cross-border operations of Chinese firms is to assist these firms in overcoming their limited established brands, and their disadvantages in technology and managerial resources, which were also the reasons why such firms decided to enter emerging markets instead of developed markets. This strategic choice is preferred to avoid direct confrontation with established firms from developed countries endowed with superior ownership advantages. Therefore, Chinese resources seeking firms innovate by increasing investment in developing and emerging markets to develop unique ownership advantages for sustainable market development and competitive advantage. This research investigates the ownership advantages of resources seeking Chinese firms in these markets using the OLI theory. The paper contributes to explaining the specific advantages of Chinese MNEs when entering emerging markets. The study applied a two-stage qualitative methodology to examine Chinese firms operating in Nigeria. The first stage included an exploratory study based on interviews with key informants and experts while the second stage included a case study methodology. The study focused on resources seeking Chinese MNEs operating in Nigeria.

Outward FDI in China’s hotel industry: An inward FDI perspective

Outward foreign direct investment (OFDI) from emerging economies in the hospitality industry, the hotel sector in particular, has drastically increased in recent years. Based on Dunning's eclectic paradigm/Ownership-Location-Internalization (OLI) theory and the Investment Development Path (IDP) theory, the OFDI in the hotel sector was assessed from the home country's perspective using an inward FDI (IFDI) approach. Using China as a case study, this paper employed panel data and a negative binomial regression method to examine the impact of IFDI on hotel OFDI. The empirical findings showed that hotel-related IFDI is an important source of the ownership advantage of China's hotel OFDI. Meanwhile, China's IFDI in the hotel industry appear to exert positive and significant effects on its hotel OFDI. Furthermore, international market proximity, economic development, and tourism development were found to moderate significantly these effects. Finally, additional robustness checks showed that the results are reliable.

Race for market share gains: How emerging market and advanced economy MNEs perform in each other’s turf

The international business literature, while extensive by now, has given scant attention to the direct comparison of the performance of advanced economy multinational enterprises (AMNEs) and emerging market multinational enterprises (EMNEs) in international markets. In particular, the question of how well these firms perform in each other’s home markets is an intriguing one. In this study, we examine “market share” performance of AMNEs and EMNEs in each other’s countries using a comprehensive, longitudinal dataset. Drawing from the eclectic paradigm, we contend that, in comparison, EMNEs perform better as they: i) develop non-traditional ownership advantages based on their learnings in their home markets, and ii) expand into advanced economy markets relying on non-traditional ownership advantages. Our findings show a declining performance of AMNEs operating in emerging markets over time, while EMNEs generally appear to benefit from increased market shares in advanced economy markets for the same period.

Internationalization Strategies of Emerging-Market Multinational Enterprises: The Case of Investments Made by Yılport Holding in Port Cities in Foreign Countries

The literature on internationalization strategies of multinational enterprises traditionally examines the activities and strategies of multinational enterprises originating from developed markets; besides, it is an area that is developing more rapidly with the multiplier effect of globalization processes. However, in recent years, this field has started to attract attention with the increase in foreign direct investments made by multinational enterprises originating from emerging markets to other countries. In this study, it is aimed to understand the contributions that multinational enterprises originating from emerging markets can make to mainstream theories in the field of international business, and to focus on the differences between emerging-market multinational enterprises and developed market multinational enterprises in terms of internationalization strategies. In this context, Yılport Holding, which is a container terminal operator in Turkey, and recently attracted attention with its foreign direct investments in both developed and emerging markets, by being the 11th largest company on a global scale in a very short time, has been examined as a case study. The fact that Yılport Holding, a multinational company originating from the emerging market, has grown rapidly through acquisitions in a very short time, as well as gaining an unexpected advantage in terms of ownership advantage, branding and courage to enter the market, are all in contradiction with traditional internationalization theories. These can be explained as the efforts of multinational enterprises originating from emerging markets to quickly catch up with and surpassing multinational enterprises originating from developed countries by eliminating various disadvantages arising from these markets.

How does Industry 4.0 affect international exposure? The interplay between firm innovation and home-country policies in post-offshoring relocation decisions

This paper investigates whether and how Industry 4.0 innovation intensity, which is developed through patenting and which provides a firm-specific ownership advantage, relates to “relocation of second degree” (RSD) of manufacturing activities, i.e. the movement of previously offshored activities to either the home country (RHC) or a third country (RTC), thus representing a reconfiguration of the firm’s extant international exposure. Moreover, we analyse the role of Industry 4.0 policies adopted in the home country, which offers a location advantage that can possibly moderate this relationship. Our findings, based on a sample of 118 RSDs implemented by European companies, reveal that both Industry 4.0 innovation intensity (at the firm level) and policies (at home-country level) have an impact, with the former pushing firms towards RTC, unless the latter are in place at the home country, thus showing the pivotal role of Industry 4.0 policies in re-attracting Industry 4.0 innovative companies in their country of origin.