Structure Of Multinational Corporations Research Articles

The Impact of Federal Reserve Interest Rate Hike on the Entertainment Industry: An Empirical Evidence

The purpose of this paper is to investigate the impact of Federal Reserve interest rate hikes on the entertainment industry, with a focus on the American film company Disney. The study utilizes a VAR model for impulse response analysis and an ARMA-GARCH model for assessing stock returns and conditional variances. The findings indicate that a rise in the USD index leads to a decrease in Disney's earnings from foreign markets, and a Fed rate hike could have a negative impact on its profitability. However, higher interest rates can encourage funds to flow into the stock market and increase the demand for stocks, leading to a rise in stock prices. Negative effect dominates at the beginning, followed by positive effect, and then changes back to negative effect, gradually net effect tends to 0 over time. The paper suggests that investors diversify their portfolio, and that enterprises develop targeted risk management and seek policy support. The study provides insights into the multifaceted effects of a Fed rate hike on the entertainment industry, and contributes to the existing literature on exchange rate risk and capital structure in multinational corporations.

Modeling dynamic location expansion of multinational firms in France

This paper focuses on the factors that affect location decisions of multinational firms in the French regions in terms of the type of organizational structure and location characteristics. The objective is to examine the significance of the factors that affect firms’ choice of location and the operations in different locations. The paper considers the manufacturing and service sectors that differ in terms of nature of products and operations. This paper uses firm-level data extracted from “Bilan France” database. The database contains 6840 investment projects that cover the period from 2001 to 2011. The firms included in the database originate from 77 foreign countries. The study utilizes the properties of mixed logistic regression and nested logit to fulfill the objectives of the paper. The results show that (a) the organizational structure of projects in the French regions is not a random process, that is, coordination and communication costs matter for multinational firms, (b) multinational firms are willing to group their projects geographically in the same region, (c) the organizational structure of multinational corporations in France matters for the location decision of their new projects more than the regional characteristics, (d) the concentration of projects is more strategic for the manufacturing sector relative to the service sector, (e) internal coordination costs and the effect of stages (upstream and downstream) are more sensitive in the manufacturing sector. Having agreed upon in the literature that location decisions are country specific, this study offers robust evidence that multinational corporations in France adjust organizational structure and take into consideration regional characteristics in order to benefit from economies of scale.

Modeling Dynamic Location Expansion of Multinational Firms in France

This paper focuses on the factors that affect location decisions of multinational firms in the French regions in terms of the type of organizational structure and location characteristics. The objective is to examine the significance of the factors that affect firms’ choice of location and the operations in different locations. The paper considers the manufacturing and service sectors that differ in terms of nature of products and operations. This paper uses firm-level data extracted from “Bilan France” database. The database contains 6840 investment projects that cover the period from 2001 to 2011. The firms included in the database originate from 77 foreign countries. The study utilizes the properties of mixed logistic regression and nested logit to fulfill the objectives of the paper. The results show that (a) the organizational structure of projects in the French regions is not a random process, that is, coordination and communication costs matter for multinational firms, (b) multinational firms are willing to group their projects geographically in the same region, (c) the organizational structure of multinational corporations in France matters for the location decision of their new projects more than the regional characteristics, (d) the concentration of projects is more strategic for the manufacturing sector relative to the service sector, (e) internal coordination costs and the effect of stages (upstream and downstream) are more sensitive in the manufacturing sector. Having agreed upon in the literature that location decisions are country specific, this study offers robust evidence that multinational corporations in France adjust organizational structure and take into consideration regional characteristics in order to benefit from economies of scale.

Вопросы регулирования трансфертного ценообразования в системе налогового контроля России

In article the questions of tax control of the prices of transactions between vertically integrated structures of multinational corporations, holdings and other business combinations are considered. An assessment of modern model of tax administration, from the point of view of the preferences and privileges provided to corporations is given. Features of assessment of criteria of controllability of transactions and instruments of control of transfer pricing are revealed. Constructive proposals on realization of the stimulating capacity of tax system taking into account the interests of development of small and medium business are given.

Foreign earnings management of US multinational companies: The role of decision rights

US multinational corporations (MNCs) need to allocate decision rights between parent companies and subsidiaries to manage global operations. This article examines how the allocation of decision rights affects foreign earnings management of MNCs. I find that the extent of foreign earnings management increases when parents retain centralized decision rights. But internal cross-border frictions, between parents and their foreign subsidiaries, and the external local legal environment in which foreign subsidiaries operate can mitigate foreign earnings management despite parents having centralized decision rights. This study provides evidence on how the decision structures of MNCs affect where earnings are managed.

A supranational regime that nationalizes social conflict: Explaining European trade unions' difficulties in politicizing European economic governance

Until very recently, European employers and political leaders denied the need for any coordination in industrial relations at EU level. In 2011, however, the European Parliament and the Council adopted a new European economic governance regime that makes EU member states' labor policies subject to multilateral surveillance procedures. This paper analyzes this ‘silent revolution’ from above and assesses organized labor's responses to this challenge. It shows that the EU's new governance regime does not follow the classical model of a federal state, but rather the governance structures of multinational corporations that control their local subsidiaries through the use of whipsawing tactics and coercive comparisons. European trade unions' and social movements' difficulties in politicizing European economic governance are thus best explained by the ability of the new supranational EU regime to nationalize social conflicts.

Geography, Networks and Change

In this symposium, we reflect on issues particular to the interplay of geography, networks, and change through a series of empirical and theoretical papers followed by a discussion of the salient issues. Although the importance of networks has been recognized for some time, the underlying role of geography in providing localized opportunities to shape network topologies and correspondingly, their adaptive potential, remain underdeveloped. We present four empirical papers and one theoretical paper touching upon multiple levels of analysis, industries, and perspectives. At the intra-organizational level, Agrawal, Liu, and Singh use a novel dataset collected at a biotechnology firm to examine the role of geographically proximate peers in shaping a scientist’s research trajectory. Furman and Murray also examine the biopharmaceutical industry, but at the regional level. They use cross-country differences to examine the emergence and evolution of the human embryonic stem cell field. Alcacer and Tabakovic examine the vertical structure of multinational corporations in the semiconductor industry, and how these linkages affect a focal organizational ability to innovate and change. In a final empirical paper, Audia and Teckchandani maintain the emphasis on geography and networks, but expand the empirical focus to include a broad swath of industries. Specifically, they examine the conditions that influence the emergence of organizational populations within geographic communities. Lastly, King expands upon the theory of resilience to bridge the gap between bio-ecology and industry change. As a whole, this symposium serves to reinforce the critical role of geography in shaping network structures and their adaptive potential, a research arena we believe to be of interest to the management community as a whole.Local Environments and Scientific Research Trajectories: Evidence from a bio-pharmaceutical firmPresenter: Ajay K. Agrawal; U. of TorontoPresenter: Christopher C. Liu; U. of TorontoPresenter: Jasjit Singh; INSEADNational Institutions and Network Emergence: Evidence from human embryonic stem cell researchPresenter: Jeff Furman; Boston U.Presenter: Fiona Murray; Massachusetts Institute of TechnologyVertical De-integration and Innovation in Global Production NetworksPresenter: Juan Alcacer; Harvard U.Presenter: Haris Tabakovic; Harvard Business SchoolOrganizational Emergence in U.S. CommunitiesPresenter: Pino G. Audia; Dartmouth CollegePresenter: Atul Teckchandani; California State U., FullertonResilience Theories from Ecology and ManagementPresenter: Andrew King; Dartmouth College

FDI, Export, and Capital Structure

This study investigates the impact of foreign direct investment (FDI) and export on capital structure for firms in emerging economies. The hypotheses are developed based on an agency theory perspective and are tested using a sample of 566 Taiwanese firms. We find that the behavior of multinational corporations (MNCs) with a high debt ratio is in line with agency theory predictions. Our findings show that: (1) MNCs in emerging economies, defined as those firms with at least one foreign subsidiary or some extent of FDI, have a higher level of debt than non-MNCs, which contrasts with the findings for MNCs based in developed countries; and (2) export intensity leads to a lower debt ratio, which has not received much attention in previous studies. We propose several factors related to the context of emerging economies to explain these contradictory findings. We also explore the interaction effect of the extent of FDI and export intensity on the capital structure of MNCs, and find that the impact is negative, which implies that both monitoring costs and agency costs rise dramatically for creditors when firms’ international operations become overly complicated.

On the meanings of structure in the international business discourse

PurposeThis paper seeks to examine the meaning and nature of the structure metaphor in the social sciences, and the consequent implications for the academic activity of describing and substantiating new structural forms of multinational corporations (MNCs) in the international business discourse.Design/methodology/approachThe paper's approach is primarily conceptual, but also introduces some fieldwork. The paper contrasts generalist work in the social sciences on structure with a close reading of the foundational texts on structure in MNCs along with a broader reading on the considerable attempts to describe new structures for MNCs. By interrelating these literatures with fieldwork that deconstructs stories from actors within MNCs, it opens a broader criticism on the discourse on structuring the MNC.FindingsThe paper suggests that the phalanx of new MNC structures could, perhaps, be better understood as a criticism of using the structure metaphor to describe the MNC. On safer ground, it suggests the point of difference between older forms of MNC and the variously described new forms arise from the contrasting definitions of structure used by Giddens.Originality/valueThe paper's originality and value arise from its unique consideration of the structure metaphor in social sciences and the discourse on structure in the international business discourse. It responds to calls for new research methods, and more critical approaches by those hoping to assist managers, in this functionally‐oriented discourse.

Creditor rights and debt allocation within multinationals

We analyze the optimal debt structure of multinational corporations choosing between centralized or decentralized borrowing. We identify how this choice is affected by creditor rights and bankruptcy costs, taking into account managerial incentives and coinsurance considerations. We find that partially centralized borrowing structures are optimal with either weak or strong creditor rights. For intermediate levels of creditor rights fully decentralized (centralized) borrowing structures are optimal if managers have strong (weak) empire-building tendencies. Decentralized borrowing is more attractive for companies focussing on short-term profitability. Credits are rather taken in countries with better creditor rights and more efficient insolvency systems.

Ahoy There! Toward Greater Congruence and Synergy Between International Business and Business Ethics Theory and Research

ABSTRACT:The literatures of business ethics and international business have generally had little influence on each other. Nevertheless, the decline in the power of nation states, the emergence of non-governmental organizations, the proliferation of self-regulatory bodies, and the changing responsibilities, roles, and structure of multinational corporations make constructive engagement between these two disciplines imperative. This changing institutional landscape creates many areas of common concern. In this article, we describe the changing institutional context of global business and suggest ways in which both business ethics and international business may inform each other more fruitfully.

Securities laws in the host countries and the capital structure of US multinationals

We examine whether securities laws in the host countries influence the capital structure choice of United States (US) multinational corporations. We develop firm-level global indices to classify each corporation in terms of its exposure to the security laws that govern the rights of security holders in the countries where it has subsidiaries. The results show that the use of long-term debt is positively related to the firm's global standing in terms of common law legal origin, burden of proof, investor protection, disclosure requirements, and public enforcement. The securities laws in a country affect the capital structure of multinational corporations that has subsidiaries in that country.

Incoherence between Tax and Development Policies: the case of the Netherlands

This article discusses incoherence between tax and development policies, a relatively new area in the debate on policy coherence for development, using a case study of the Netherlands. Dutch business entities play a key role in tax avoidance structures of multinational corporations. We argue that the Dutch tax regime facilitates the avoidance of substantial amounts of tax revenues in developing countries when compared to the Dutch aid budget. As domestic tax revenues are an important source of financing for development, this suggests that the Dutch tax policy is incompatible with the Dutch policy on development co-operation. The lack of policy coherence is largely unintended but it has structural and political causes.

The capital structure of multinational corporations: Canadian versus U.S. evidence

Contrary to the U.S. evidence, we show that Canadian multinational corporations (MNCs) display higher leverage than domestic firms (DCs). This higher leverage is due to lower agency costs of debt associated with MNCs' U.S. operations. We also find that the Canadian firms with international bond market access have higher leverage than firms without such access. Comparison with a U.S. matched sample shows that the sensitivity of leverage to firm-specific factors differs between the two countries, especially for the MNCs samples. Our evidence indicates that capital structures of MNCs are a complex interaction of both home and host country factors and differences in leverage determinants across countries.

Hierarchical Segmentation of R&D Process and Intellectual Property Protection: Evidence from Multinational R&D Labs in China

This paper examines how multinational corporations (MNCs) protect their research and development (R&D) activities that are conducted in weak intellectual property rights (IPR) regime countries. Findings from a small scale survey and three case studies in China show that hierarchical segmentation of R&D process can be an effective way for MNC R&D labs to protect their intellectual property. Furthermore, a modular R&D structure seen in many IT companies can facilitate this hierarchical segmentation. A center-peripheral R&D organizational structure of MNCs thus appears in the era of globalization of R&D.

Creditor Rights and Debt Allocation within Multinationals

We analyze the optimal debt structure of multinational corporations choosing between centralized or decentralized borrowing. We identify how this choice is affected by creditor rights and bankruptcy costs, taking into account managerial incentives and coinsurance considerations. We find that partially centralized borrowing structures are optimal with either weak or strong creditor rights. For intermediate levels of creditor rights fully decentralized (centralized) borrowing structures are optimal if managers have strong (weak) empire building tendencies. Decentralized borrowing is more attractive for companies focussing on short-term profitability. Credits are rather taken in countries with better creditor rights and more efficient insolvency systems.

The Impact of Strategic Fit among Strategy, Structure, and Processes on Multinational Corporation Performance: A Multimethod Assessment

The international marketing literature has produced divergent findings regarding the effect of a standardized marketing strategy on firm performance among large multinational corporations (MNCs). Prior research has typically considered external or environmental factors to reconcile different findings. This study employs multiple perspectives of strategic fit (moderation, mediation, profile deviation, and covariation) to examine the effect of the internal fit among strategy, structure, and processes of MNCs and explores their effects on firm performance. Empirical results based on 206 MNCs support the mediation, profile deviation, and covariation perspectives, but they fail to confirm the moderation perspective.

Hierarchical Pyramids and Heterarchical Networks: Organisational Strategies and Structures of Multinational Corporations and its Impact on World Development

On the occasion of the thirty‐first anniversary of the publication of The Multinational Corporation and the Law of Uneven Development by Hymer, the paper seeks to assess the relevance of Hymer's prediction to our current understanding of the multinational company (MNC) and its role in world economic development. It argues that the largely ethnocentric type of MNC portrayed by Hymer is descriptive of one type of MNC, and that systematic differences exist between different types on the basis of inter alia corporate organisational structure, the level and type of organisational control mechanisms, and the extent of interdependence between interorganisational units.

Diversification strategy and capital structure of multinational corporations

This study examines the relationship between the capital structure of multinational corporations (MNCs) and their diversification strategy. Both the international market (multi-country operations) and the product (multi-industry operations) dimension of diversification are integrated into the analysis and a switching of regression regimes methodology is employed that accounts for the bi-dimensional nature of the diversification strategy pursued by MNCs. The model identifies four types of diversification regimes. The results suggest that leverage increases with both international and product diversification. It is also found that the combination of both types of diversification leads to lower levels of bankruptcy risk. Although the role of the determinants of MNC capital structure varies with the diversification strategy, there seem to be common determinants. In particular, profitability and bankruptcy risks are negatively related to the debt ratio of MNCs.

Corporate and Environmental Influences on Personnel Outcomes in Organizational Labor Markets: A Cross-National Comparison of US and German Branch Offices of a Multinational Bank

Many firms competing in the current global economy are multinational corporations (MNCs) that operate across national boundaries. Multinational corporations have the dual imperatives of maintaining internal consistency among their subsidiaries while simultaneously adapting to different local environments. Comparing personnel outcomes between subsidiaries of the same multinational corporation located in different countries would provide a specific context within which we can examine the relative importance of these two imperatives. Using personnel data from a multinational bank, we compare personnel outcomes such as turnover and hiring rates, tenure distributions, proportion of part-time workers, and gender composition of its subsidiary retail banking operations in the Federal Republic of Germany and in the United States. We further analyze differences in outcomes between comparable job levels in each country, recognizing that different levels in the hierarchical structures of MNCs may face varying pressures for internal consistency and local adaptation. Our results show that the local environment has a strong effect on personnel outcomes, although differences between countries decrease at higher job levels. The possible sources and implications of increasing similarity at higher job levels is discussed.