Pub Date : 2024-03-28DOI: 10.1007/s11575-024-00529-5
Roberta Aguzzoli, Jorge Lengler, Stewart R. Miller, Agnieszka Chidlow
This paper examines trends, challenges and opportunities in terms of research methodologies in qualitative IB research. In particular, it examines trends for the dominant (positivism/(post)positivism) paradigm versus alternative paradigms (i.e., social constructivism, critical realism and interpretivism) and provides a comparative analysis of data collection and methods. Using mixed methods to collect and analyze data on qualitative articles published in International Business Review, Journal of International Business Studies, Journal of World Business, and Management International Review, we examine trends and differences between the dominant and alternative paradigms and use qualitative content analysis to investigate how alternative paradigm papers are conceptualized and presented. Moreover, we interview authors of non-positivist papers to gain in-depth understanding of the findings. We reveal differences across the paradigms and provide evidence of paradigmatic fit between methods and data collection techniques for the dominant paradigm, but more variation for alternative paradigms. Lastly, we provide prescriptions for IB scholars in terms of methodology diversity and how complex IB phenomena can be pursued vis-a-vis alternative paradigms.
{"title":"Paradigms in Qualitative IB Research: Trends, Analysis and Recommendations","authors":"Roberta Aguzzoli, Jorge Lengler, Stewart R. Miller, Agnieszka Chidlow","doi":"10.1007/s11575-024-00529-5","DOIUrl":"https://doi.org/10.1007/s11575-024-00529-5","url":null,"abstract":"<p>This paper examines trends, challenges and opportunities in terms of research methodologies in qualitative IB research. In particular, it examines trends for the dominant (positivism/(post)positivism) paradigm versus alternative paradigms (i.e., social constructivism, critical realism and interpretivism) and provides a comparative analysis of data collection and methods. Using mixed methods to collect and analyze data on qualitative articles published in <i>International Business Review, Journal of International Business Studies, Journal of World Business, and Management International Review</i>, we examine trends and differences between the dominant and alternative paradigms and use qualitative content analysis to investigate how alternative paradigm papers are conceptualized and presented. Moreover, we interview authors of non-positivist papers to gain in-depth understanding of the findings. We reveal differences across the paradigms and provide evidence of paradigmatic fit between methods and data collection techniques for the dominant paradigm, but more variation for alternative paradigms. Lastly, we provide prescriptions for IB scholars in terms of methodology diversity and how complex IB phenomena can be pursued vis-a-vis alternative paradigms.</p>","PeriodicalId":51434,"journal":{"name":"Management International Review","volume":null,"pages":null},"PeriodicalIF":4.3,"publicationDate":"2024-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140323722","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-03-27DOI: 10.1007/s11575-024-00528-6
Ha Nguyen, Jorma Larimo, Douglas Dow
International business scholars have long recognized the potential influence of cultural differences on foreign divestment; however, the empirical results are mixed. Our study helps resolve this contradiction and contribute to the existing literature in three ways. First, we advocate the use of cultural friction metric, instead of the more traditional cultural distance approach. This overcomes a key limitation in the modelling the impact of cultural differences. The friction construct metric includes an index of firm-specific factors, referred to as the degree of ‘cultural interaction’. This index moderates the impact of cultural distance, reflecting firm—level differences. We also build on calls for more Positive Organizational Scholarship by challenging the negative bias in the international business literature and propose a curvilinear effect of cultural differences on divestment probability. Lastly, we investigate a potential boundary condition—the moderating effect of entry mode on the main hypothesis. Our empirical sample include 2120 Finnish foreign subsidiaries operating in 40 countries during 1970–2010. Our analyses confirm that the cultural differences, when measured by the friction metric, appear to be a significant and superior predictor of subsidiary divestment probability, and that the relationship appears to be U-shaped. Our robustness analyses also highlight the importance of which cultural framework is applied and controlling for selection bias.
{"title":"The Curvilinear Impact of Cultural Friction on Foreign Divestment","authors":"Ha Nguyen, Jorma Larimo, Douglas Dow","doi":"10.1007/s11575-024-00528-6","DOIUrl":"https://doi.org/10.1007/s11575-024-00528-6","url":null,"abstract":"<p>International business scholars have long recognized the potential influence of cultural differences on foreign divestment; however, the empirical results are mixed. Our study helps resolve this contradiction and contribute to the existing literature in three ways. First, we advocate the use of cultural friction metric, instead of the more traditional cultural distance approach. This overcomes a key limitation in the modelling the impact of cultural differences. The friction construct metric includes an index of firm-specific factors, referred to as the degree of ‘cultural interaction’. This index moderates the impact of cultural distance, reflecting firm—level differences. We also build on calls for more Positive Organizational Scholarship by challenging the negative bias in the international business literature and propose a curvilinear effect of cultural differences on divestment probability. Lastly, we investigate a potential boundary condition—the moderating effect of entry mode on the main hypothesis. Our empirical sample include 2120 Finnish foreign subsidiaries operating in 40 countries during 1970–2010. Our analyses confirm that the cultural differences, when measured by the friction metric, appear to be a significant and superior predictor of subsidiary divestment probability, and that the relationship appears to be U-shaped. Our robustness analyses also highlight the importance of which cultural framework is applied and controlling for selection bias.</p>","PeriodicalId":51434,"journal":{"name":"Management International Review","volume":null,"pages":null},"PeriodicalIF":4.3,"publicationDate":"2024-03-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140323407","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-01-22DOI: 10.1007/s11575-023-00527-z
Abstract
This paper analyzes how MNCs’ intermediate units—those that exercise authority over other subsidiaries—apply specific control mechanisms: centralization, formalization, outcome control, and socialization. We combine agency and network theory to explain how intermediate units’ dual agency role—as both principal and agent— and their network embeddedness form the choice of control mechanisms. More specifically, we propose hypotheses on how the intermediate units’ internal and external relationships determine their choice of control mechanism. We study this issue in the context of Spanish intermediate units —owned by European MNCs— that exercise authority over subsidiaries in Latin America.
{"title":"MNCs’ Intermediate Units and Their Choice of Control Mechanisms","authors":"","doi":"10.1007/s11575-023-00527-z","DOIUrl":"https://doi.org/10.1007/s11575-023-00527-z","url":null,"abstract":"<h3>Abstract</h3> <p>This paper analyzes how MNCs’ intermediate units—those that exercise authority over other subsidiaries—apply specific control mechanisms: centralization, formalization, outcome control, and socialization. We combine agency and network theory to explain how intermediate units’ dual agency role—as both principal and agent— and their network embeddedness form the choice of control mechanisms. More specifically, we propose hypotheses on how the intermediate units’ internal and external relationships determine their choice of control mechanism. We study this issue in the context of Spanish intermediate units —owned by European MNCs— that exercise authority over subsidiaries in Latin America.</p>","PeriodicalId":51434,"journal":{"name":"Management International Review","volume":null,"pages":null},"PeriodicalIF":4.3,"publicationDate":"2024-01-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139515463","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-27DOI: 10.1007/s11575-023-00525-1
Liudmyla Svystunova, Yulia Muratova, Johann Fortwengel, Tony Edwards
Over more than 30 years, research on the interactions between multinational corporations (MNCs) and their institutional host environments has produced rich but scattered insights, which this review organises and integrates. We map the current state of knowledge and build an integrative model involving motivation and host context as antecedents; interaction strategy and actors as the phenomenon; and consequences, especially at the organisational level, as outcomes. By reviewing 176 articles published in leading journals, we reveal previously hidden relationships between host-country institutional context, proactive and reactive strategies, and positive and negative outcomes for the focal organisation. We also identify three future research frontiers focused on understudied aspects of interactions between MNCs and institutions: dynamics of strategies, dynamics of impact, and microfoundational dynamics. We suggest that combining organisational institutionalism and comparative institutionalism offers a pathway to push the outlined research frontiers.
{"title":"Multinational Corporations’ Interactions with Host Institutions: Taking Stock and Moving Forward","authors":"Liudmyla Svystunova, Yulia Muratova, Johann Fortwengel, Tony Edwards","doi":"10.1007/s11575-023-00525-1","DOIUrl":"https://doi.org/10.1007/s11575-023-00525-1","url":null,"abstract":"<p>Over more than 30 years, research on the interactions between multinational corporations (MNCs) and their institutional host environments has produced rich but scattered insights, which this review organises and integrates. We map the current state of knowledge and build an integrative model involving motivation and host context as antecedents; interaction strategy and actors as the phenomenon; and consequences, especially at the organisational level, as outcomes. By reviewing 176 articles published in leading journals, we reveal previously hidden relationships between host-country institutional context, proactive and reactive strategies, and positive and negative outcomes for the focal organisation. We also identify three future research frontiers focused on understudied aspects of interactions between MNCs and institutions: dynamics of strategies, dynamics of impact, and microfoundational dynamics. We suggest that combining organisational institutionalism and comparative institutionalism offers a pathway to push the outlined research frontiers.</p>","PeriodicalId":51434,"journal":{"name":"Management International Review","volume":null,"pages":null},"PeriodicalIF":4.3,"publicationDate":"2023-11-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138541892","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-24DOI: 10.1007/s11575-023-00522-4
Nadia Zahoor, Jie Wu, Huda Khan, Zaheer Khan
By presenting an investigation of the impact of international trade protectionism on the reconfigurations of the global value chains (GVCs), this paper challenges the perceived assumption of ongoing globalization and the free flow of goods and services. Building on the de-globalization and GVCs’ literature, we performed a historical content analysis on 174 articles from 2016 to 2020 published in leading and major national and international newspapers. Our findings suggest that international trade protectionism has altered the landscape of GVCs by causing widespread disruption to their functioning, thus making them prone to future external policy risks. Such disruption is having a varying impact on various industries, whereby it is causing greater harm to those industries that are more global in nature and thus rely on global suppliers. We draw implications of our findings for research and practice.
{"title":"De-globalization, International Trade Protectionism, and the Reconfigurations of Global Value Chains","authors":"Nadia Zahoor, Jie Wu, Huda Khan, Zaheer Khan","doi":"10.1007/s11575-023-00522-4","DOIUrl":"https://doi.org/10.1007/s11575-023-00522-4","url":null,"abstract":"<p>By presenting an investigation of the impact of international trade protectionism on the reconfigurations of the global value chains (GVCs), this paper challenges the perceived assumption of ongoing globalization and the free flow of goods and services. Building on the de-globalization and GVCs’ literature, we performed a historical content analysis on 174 articles from 2016 to 2020 published in leading and major national and international newspapers. Our findings suggest that international trade protectionism has altered the landscape of GVCs by causing widespread disruption to their functioning, thus making them prone to future external policy risks. Such disruption is having a varying impact on various industries, whereby it is causing greater harm to those industries that are more global in nature and thus rely on global suppliers. We draw implications of our findings for research and practice.</p>","PeriodicalId":51434,"journal":{"name":"Management International Review","volume":null,"pages":null},"PeriodicalIF":4.3,"publicationDate":"2023-11-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138537089","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-06DOI: 10.1007/s11575-023-00523-3
Nele Jacobs, Bernhard Swoboda
Abstract During the COVID-19 pandemic, consumer behavior and brand preferences changed. However, surprisingly little is known about how or why corporate brand associations differ and change across countries during such black swan events, especially for multinationals with a specific expertise and ability, for example, to offer vaccines. The authors use institutional theory to fill this gap. They contribute to international business research by analyzing the roles of national institutions in consumers’ corporate brand ability associations (CBAA) in 20 countries over time. They find generally different roles of regulative, normative, and cultural-cognitive institutions in consumers’ CBAA. Moreover, those roles changed and varied for Pfizer, as a multinational corporation that offered the first vaccine in Western countries, and its competitors before and during the pandemic. Institutional theory strongly complements signaling theory in cross-national studies on CBAA. This study shows, for the first time, which institutions drive CBAA cross-nationally and why the role of each institution changes during a black swan event, such as COVID-19. It has direct implications for managers interested in cross-national consumer responses.
{"title":"Effects of National Institutions on Corporate Brand Ability Associations During the Pandemic","authors":"Nele Jacobs, Bernhard Swoboda","doi":"10.1007/s11575-023-00523-3","DOIUrl":"https://doi.org/10.1007/s11575-023-00523-3","url":null,"abstract":"Abstract During the COVID-19 pandemic, consumer behavior and brand preferences changed. However, surprisingly little is known about how or why corporate brand associations differ and change across countries during such black swan events, especially for multinationals with a specific expertise and ability, for example, to offer vaccines. The authors use institutional theory to fill this gap. They contribute to international business research by analyzing the roles of national institutions in consumers’ corporate brand ability associations (CBAA) in 20 countries over time. They find generally different roles of regulative, normative, and cultural-cognitive institutions in consumers’ CBAA. Moreover, those roles changed and varied for Pfizer, as a multinational corporation that offered the first vaccine in Western countries, and its competitors before and during the pandemic. Institutional theory strongly complements signaling theory in cross-national studies on CBAA. This study shows, for the first time, which institutions drive CBAA cross-nationally and why the role of each institution changes during a black swan event, such as COVID-19. It has direct implications for managers interested in cross-national consumer responses.","PeriodicalId":51434,"journal":{"name":"Management International Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135634778","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract There is growing interest in the nature and possible extent of de-globalization. This paper explores the impact that protectionist measures have on multinational enterprise (MNE) reshoring back to the UK. Besides taking into account the global trends indicating a return to protectionism, the existing literature highlights various firm-level and structural country-level determinants of reshoring decisions. We test a conceptual model with parent-subsidiary firm-level data for the period 2009 to 2017. We conclude that firms that are more sensitive to wage costs in their overseas subsidiaries were more likely to reshore. We did not find that more capital-intensive firms had a higher propensity to reshore. We find that our results are mostly driven from UK MNEs with subsidiaries in EU. This result has clear implications for a potential Brexit effect. Theoretically, we base our findings in transactional cost economics to help explain why different types of firms behave in the way they do, and why different types of firms may respond in quite different ways to the same mix of institutions.
{"title":"How Does Protectionism Impact Multinational Firm Reshoring? Evidence from the UK","authors":"Yama Temouri, Vijay Pereira, Agelos Delis, Geoffrey Wood","doi":"10.1007/s11575-023-00521-5","DOIUrl":"https://doi.org/10.1007/s11575-023-00521-5","url":null,"abstract":"Abstract There is growing interest in the nature and possible extent of de-globalization. This paper explores the impact that protectionist measures have on multinational enterprise (MNE) reshoring back to the UK. Besides taking into account the global trends indicating a return to protectionism, the existing literature highlights various firm-level and structural country-level determinants of reshoring decisions. We test a conceptual model with parent-subsidiary firm-level data for the period 2009 to 2017. We conclude that firms that are more sensitive to wage costs in their overseas subsidiaries were more likely to reshore. We did not find that more capital-intensive firms had a higher propensity to reshore. We find that our results are mostly driven from UK MNEs with subsidiaries in EU. This result has clear implications for a potential Brexit effect. Theoretically, we base our findings in transactional cost economics to help explain why different types of firms behave in the way they do, and why different types of firms may respond in quite different ways to the same mix of institutions.","PeriodicalId":51434,"journal":{"name":"Management International Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-10-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135267313","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-10-10DOI: 10.1007/s11575-023-00518-0
Ahmad Arslan, Ofra Bazel-Shoham, Matthew Imes, Sang Mook Lee, Amir Shoham
Abstract This paper examines the impact of protectionism and intellectual property right (IPR) protection in host markets on cross-border mergers and acquisitions (CB M&As). CB M&As have become important vehicles for firms to expand into foreign markets and acquire strategic assets. In recent years, the topic has attracted significant scholarly interest. Recently, many countries have enacted protectionist measures to protect local firms and jobs. Consequently, the impact such measures have on economic activities is under debate in the literature. This study leverages the vital context of CB M&As undertaken by US multinational enterprises (MNEs) between 2011 and 2017 in 49 host countries. The findings indicate that host country IPR protection has a much more substantial and positive impact on CB M&A activities undertaken by USA MNEs than the protectionist policies of the host country by itself. The findings further suggest that, although local protectionism, by itself, does not play a significant role in CB M&As, its presence strengthens the positive effect of IPR protection on CB M&A activities in the host country, thereby supporting the contingent role of such protection. These findings have important implications for research, practice, and policy.
{"title":"Protectionism and Cross-Border Mergers and Acquisitions Undertaken by US Multinational Enterprises: The Moderating Role of Intellectual Property Rights Protection","authors":"Ahmad Arslan, Ofra Bazel-Shoham, Matthew Imes, Sang Mook Lee, Amir Shoham","doi":"10.1007/s11575-023-00518-0","DOIUrl":"https://doi.org/10.1007/s11575-023-00518-0","url":null,"abstract":"Abstract This paper examines the impact of protectionism and intellectual property right (IPR) protection in host markets on cross-border mergers and acquisitions (CB M&As). CB M&As have become important vehicles for firms to expand into foreign markets and acquire strategic assets. In recent years, the topic has attracted significant scholarly interest. Recently, many countries have enacted protectionist measures to protect local firms and jobs. Consequently, the impact such measures have on economic activities is under debate in the literature. This study leverages the vital context of CB M&As undertaken by US multinational enterprises (MNEs) between 2011 and 2017 in 49 host countries. The findings indicate that host country IPR protection has a much more substantial and positive impact on CB M&A activities undertaken by USA MNEs than the protectionist policies of the host country by itself. The findings further suggest that, although local protectionism, by itself, does not play a significant role in CB M&As, its presence strengthens the positive effect of IPR protection on CB M&A activities in the host country, thereby supporting the contingent role of such protection. These findings have important implications for research, practice, and policy.","PeriodicalId":51434,"journal":{"name":"Management International Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-10-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136294851","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-10-10DOI: 10.1007/s11575-023-00524-2
Mingqiong Mike Zhang, Ying Lu, Jiuhua Cherrie Zhu, Kaixin Zhang
Abstract In the face of growing global tendencies of anti-globalization and de-globalization, emerging economy multinational enterprises (EMNEs) are suffering from a trust deficit and multiple liabilities of foreignness in leading economies. The purpose of this study is to empirically examine the coping strategies of EMNEs towards the challenging institutional environment in host countries. It adopts a qualitative approach, conducting longitudinal multiple cases studies among MNE subsidiaries and employing interviews as the main method of data collection. The findings reveal that EMNEs are not passive recipients of the adverse institutional environment and adopt institutional adaptation as the only response strategy. Given that a single strategy cannot be effective, they have developed both proactive and protective strategies to handle the multiple liabilities of foreignness and trust deficit. This study can help EMNEs gain a better understanding of the dominance effect and develop more effective measures to manage challenging institutional environments in host countries. Given that interactions between institutional environments and firm-level strategies of MNEs remain under-researched, this study advances understanding of strategies and behaviours of MNEs in host countries.
{"title":"Dealing with Trust Deficit and Liabilities of Foreignness in Host Countries: Chinese Multinational Enterprises in Australia","authors":"Mingqiong Mike Zhang, Ying Lu, Jiuhua Cherrie Zhu, Kaixin Zhang","doi":"10.1007/s11575-023-00524-2","DOIUrl":"https://doi.org/10.1007/s11575-023-00524-2","url":null,"abstract":"Abstract In the face of growing global tendencies of anti-globalization and de-globalization, emerging economy multinational enterprises (EMNEs) are suffering from a trust deficit and multiple liabilities of foreignness in leading economies. The purpose of this study is to empirically examine the coping strategies of EMNEs towards the challenging institutional environment in host countries. It adopts a qualitative approach, conducting longitudinal multiple cases studies among MNE subsidiaries and employing interviews as the main method of data collection. The findings reveal that EMNEs are not passive recipients of the adverse institutional environment and adopt institutional adaptation as the only response strategy. Given that a single strategy cannot be effective, they have developed both proactive and protective strategies to handle the multiple liabilities of foreignness and trust deficit. This study can help EMNEs gain a better understanding of the dominance effect and develop more effective measures to manage challenging institutional environments in host countries. Given that interactions between institutional environments and firm-level strategies of MNEs remain under-researched, this study advances understanding of strategies and behaviours of MNEs in host countries.","PeriodicalId":51434,"journal":{"name":"Management International Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-10-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136296160","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-09-27DOI: 10.1007/s11575-023-00517-1
Asmund Rygh, Gabriel R. G. Benito
Abstract We study subsidiary capital structure as a mechanism of intra-MNE (multinational enterprise) governance from the perspective of “new internalization theory”. We build on the argument from transaction cost theory that equity and debt are not just financial instruments but also alternative governance structures, with equity useful for financing specific assets that do not serve well as collateral, especially when external uncertainty is high. Inside an MNE, debt represents a partial reintroduction of market mechanisms that can limit governance costs and strengthen subsidiary manager incentives. However, debt financing may be inappropriate if subsidiaries possess specific assets that are lost if debt contracts are enforced. Using subsidiary-level panel data from Norwegian MNEs, we argue that patents registered in the subsidiary represent MNE-specific non-location bound knowledge assets, while subsidiary R&D income represents location-bound and subsidiary-specific assets. We predict MNE-specific assets to be negatively related to external debt, and subsidiary-specific assets to be negatively related to all debt, under conditions of external uncertainty. We find only partial support for our hypotheses. Patents are negatively related to external debt when external uncertainty in the form of political risk is high. However, we do not find similar significant results for location-bound and subsidiary-specific assets, measured by subsidiary R&D income. For both measures, there is evidence that debt financing is viable in low-risk contexts. Further analysis indicates different effects for joint ventures as compared to wholly owned subsidiaries. We build on the partly unexpected results to propose an expanded internalization perspective on subsidiary capital structure.
{"title":"Subsidiary Capital Structure in Multinational Enterprises: A New Internalization Theory Perspective","authors":"Asmund Rygh, Gabriel R. G. Benito","doi":"10.1007/s11575-023-00517-1","DOIUrl":"https://doi.org/10.1007/s11575-023-00517-1","url":null,"abstract":"Abstract We study subsidiary capital structure as a mechanism of intra-MNE (multinational enterprise) governance from the perspective of “new internalization theory”. We build on the argument from transaction cost theory that equity and debt are not just financial instruments but also alternative governance structures, with equity useful for financing specific assets that do not serve well as collateral, especially when external uncertainty is high. Inside an MNE, debt represents a partial reintroduction of market mechanisms that can limit governance costs and strengthen subsidiary manager incentives. However, debt financing may be inappropriate if subsidiaries possess specific assets that are lost if debt contracts are enforced. Using subsidiary-level panel data from Norwegian MNEs, we argue that patents registered in the subsidiary represent MNE-specific non-location bound knowledge assets, while subsidiary R&D income represents location-bound and subsidiary-specific assets. We predict MNE-specific assets to be negatively related to external debt, and subsidiary-specific assets to be negatively related to all debt, under conditions of external uncertainty. We find only partial support for our hypotheses. Patents are negatively related to external debt when external uncertainty in the form of political risk is high. However, we do not find similar significant results for location-bound and subsidiary-specific assets, measured by subsidiary R&D income. For both measures, there is evidence that debt financing is viable in low-risk contexts. Further analysis indicates different effects for joint ventures as compared to wholly owned subsidiaries. We build on the partly unexpected results to propose an expanded internalization perspective on subsidiary capital structure.","PeriodicalId":51434,"journal":{"name":"Management International Review","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-09-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135536626","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}