Presented On: July 5, 2013 - 13:20-14:35 Chair: Peder Greve, University of St. Gallen Panelists:
Winfried Ruigrok, University of St. Gallen
Liviu Voinea, Academy of Economic Studies Bucharest Gjergji Filipi, AGENDA Institute
Dumitru Slonovschi, Magenta Consulting Lucia Casap, Magenta Consulting
This roundtable panel reports from a pioneering and recently completed research project investigating the markets for top managers and board members at the largest companies in three Eastern European developing economies. The project team leaders, who will all join this panel, will outline the key findings of the research project, explain how conceptual and methodological challenges were overcome in the research process, and discuss the vast and mutually beneficial research opportunities available through extensive investments in research collaborations between partners from developed and developing economies. The objective of this panel session is essentially twofold. On the one hand, the panel participants will discuss the research insights that have been gained from the project, i.e. an in-depth understanding of the markets for top business leaders and their services in the target countries, including several original findings that are likely to be of interest to a broad audience including IB scholars, practitioners, and policymakers. On the other hand, the panel session should motivate AIB members to engage more actively in collaborations between researchers from developed and developing countries, building on the experiences that have been made in this project, while also learning to avoid some of the potential challenges and pitfalls. (For more information, please contact: Peder Greve, University of St. Gallen, Switzerland: [email protected])
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AIB 2013 Conference Proceedings Session: 2.3.5 - Competitive
Track: Track: 7 - Emerging Economies
Capability Building in Emerging Markets
Presented On: July 5, 2013 - 13:20-14:35
Chair: Bruce McKern, China Europe International Business School
The Effects of OFDI on Home Employment and Skill Upgrading: The Roles of Technology Intensity and Location Wen Chung Hsu, National Chi Nan University
This research examines empirically the relationship between outward foreign direct investment (OFDI) and home employment. It is marked out from existing studies in the following respects. First, instead of advanced economies, it focuses on the home country employment effect in a newly industrialized economy. Second, it not only addresses the general issue of whether employment or production abroad complements or substitutes for employment in parent companies but also examines how OFDI contributes to skill upgrading in the home country. Third, this paper allows the results to vary between labour-intensive industries and technology-intensive industries. Finally, we also explore how the home country employment effect, if any, varies between different locations of investment. The results demonstrate that the location of investment and industry characteristics matter for explaining the effect of OFDI on home employment. Specifically, we find that while OFDI by Taiwanese multinationals in China depresses employment in Taiwan in both labour- and intensive industries, OFDI in other countries only produces a negative employment effect in technology-intensive sectors. An interesting finding of this study is the evidence of positive effects of OFDI on skill upgrading in Taiwan. This paper supports the argument that relocation of productivity abroad axes low skilled workers at home. Moreover, OFDI in China has a particular positive impact on skill upgrading in the home industry, lending support to the view that MNEs outsource labour-intensive goods from their affiliates in low-income countries. (For more information, please contact: Wen Chung Hsu, National Chi Nan University, Taiwan:
How IJVs Build Differentiation Capability in China? To Be Technology-Oriented or Customer-Oriented?
Alex Xin Chen, University of Hong Kong Kevin Zheng Zhou, University of Hong Kong Xiaoyun Chen, University of Macau
Should international joint ventures (IJVs) be technology-oriented or customer-oriented when attempting to achieve differentiation advantage in emerging economies such as China? To answer this question, we examine the roles of technology and customer orientations in building differentiation capability in emerging market-based IJVs and compare their relative effects. Findings from a survey of 156 IJVs in China indicate that technology orientation has a stronger positive effect on IJV differentiation capability than customer orientation and both effects depend on cultural distance and three key components of foreign parent control. Technology orientation leads to stronger differentiation capability when foreign ownership is higher and the level of foreign parent's operational control is higher, whereas customer orientation is more beneficial when the level of foreign parent's operational control is lower and communication with headquarter is more frequently and effective. (For more information, please contact: Alex Xin Chen, University of Hong Kong, Hong Kong, SAR-PRC: [email protected])
Comparing Exporters in Advanced and Emerging Markets: A Resource Based Approach Maria Chiarvesio, University of Udine
Guido Bortoluzzi, University of Trieste Eleonora Di Maria, University of Padova Raffaella Tabacco, University of Udine
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The aim of this paper is to contribute to the international business literature focusing on the characteristics of firms exporting in emerging markets. Having adopted a resource based theoretical perspective, our results show that companies addressing emerging markets have greater international experience, managerial and marketing capabilities than those operating only in developed markets. A firm’s size, its experience in the business and industry are not determining factors in those processes. (For more information, please contact: Maria Chiarvesio, University of Udine, Italy: [email protected])
Imitation to Innovation: Technological Catch-up Strategy of Firms from Emerging Economies Sungyong Chang, Columbia University
Hyunseob Kim, Ohio State University Jaeyong Song, Seoul National University
To catch up with firms in developed economies, striking a fine balance between imitation and innovation is critical for firms from emerging economies. However, few researches have investigated the firms from emerging economies’ optimal resource allocation between innovation and imitation in the catch-up process. Drawing on evolutionary economics, we built a computer simulation model on technological catch-up strategy of firms from emerging economies. The model suggests that one-sided dependency upon either imitation or innovation deters firms from emerging economies’ technological catch-up in the long run. In addition, the model shows that, in the initial stages of catch-up, firms from emerging economies should focus on imitation and begin to build technological capabilities and absorptive capacity. Then, in the later stages, when the technological gap has narrowed, they should increase its investment in innovation and attempt technological leapfrogging. We also test this model under a range of technological regime variables including appropriability, cumulativeness, and technological opportunity. Our model shows that although technological regimes influence the probability of catch-up, our original finding is resilient across a wide range of variance in technological regime variables. (For more information, please contact: Jaeyong Song, Seoul National University, Korea, South: [email protected])
Session: 2.3.6 - Competitive
Track: Track: 3 - IB Theory, FDI, and Entry Mode
Interstate Relations and FDI
Presented On: July 5, 2013 - 13:20-14:35
Chair: Peter Wayne Liesch, University of Queensland
Role of Country Alliances in Reducing Transaction Costs in Internationalisation of Indian Multinational Enterprise Firms
Peter J Buckley, University of Leeds
Peter Enderwick, Auckland Technical university Nicolas Forsans, University of Leeds
Surender Munjal, University of Leeds
This paper presents a country-level study of the role of home-host country alliances in reducing transaction costs in internationalisation of the Multinational Enterprises (MNEs). Country alliances inhere are social, economic, and political alliances between home and host countries; and, transaction costs are external transaction costs that emerge outside the firm in the host country in which firms aims to internationalise, not the internal transaction costs arising within the firm. We test this framework and its hypotheses about the role of country-level alliances and firm internationalisation with comprehensive longitudinal multi-industry data on 315 Indian firm’s acquisitions between 2000 and 2007 on a panel of 82 host countries. Results show that home-host country’s alliances reduce the transaction costs which positively influence the internationalisation of Indian MNEs. However, the extent to which such internationalisation of Indian firms takes place depends upon the nature of the country-level alliances. (For more information, please contact: Surender Munjal, University of Leeds, United Kingdom: [email protected])
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AIB 2013 Conference Proceedings
Interstate Political Relations and Multinational Investment Tatiana Lukoianova, University of Western Ontario Quan Li, Texas A&M University
Understanding how political risk influences multinational enterprises’ (MNEs) behaviors has long attracted scholarly attention in three fields: international business (IB), international economics, and international political economy (IPE). Scholars in the three fields have almost exclusively focused on country-specific political risks, ignoring the importance of bilateral political relation-specific risks to MNE investment. The few exceptional studies that do analyze such risk produce conflicting theoretical expectations, diffuse explanations, and mixed evidence. Extending the "new" new trade theory, we offer a coherent theoretical framework that identifies precisely the conditions under which bilateral risks do and do not influence MNE investment. Bilateral risks change MNE behaviors only if they change the FDI productivity cutoff above which MNEs operate profitably in a host. Lower bilateral risks lower the FDI productivity cutoff and consequently, increase the amount of bilateral FDI. Firm- and dyad-level tests substantiate our argument. Our research makes several contributions and offers practical lessons for governments and business managers. (For more information, please contact: Tatiana Lukoianova, University of Western Ontario, Canada: [email protected])
The Bilateral Relation and Foreign Subsidiary Survival Tianyou Hu, National University of Singapore
This study examined the relationship between bilateral relation between the home and host countries, and the survival of the foreign subsidiaries. Integrating the institutional theory and legitimacy perspectives, this study established the theoretical linkage of the fluctuation of bilateral relation and the failure of FDI, followed by an empirical study that examined the extent to which bilateral relation could affect subsidiary survival and how foreign firms could mitigate such risks. The survival analysis of 5248 Japanese subsidiaries in China during 1991-2010 showed that the exit likelihood of the subsidiaries was positively associated with the deterioration of Sino-Japan bilateral relation. Such a relation hazard could be alleviated through accumulating local experience, locating in regions with advanced market development and implementing localization strategies. (For more information, please contact: Tianyou Hu, National University of Singapore, Singapore: [email protected])
Spatial Dependence of Country Relatedness: The Role of Host-Country Connectedness Sokol Celo, Suffolk University
The conventional determinants of FDI location decisions are limited to the characteristics of the host country or the home-host dyad. Borrowing from research in spatial dependence and social network analysis, we argue that the decision of home country firms to invest in a host country depends also on the ability of the host country to serve as a stepping-stone to invest in third countries. Consequently, on average the indirect route connecting a home with a host country via an intermediate country will be more effective than the direct one. By examining the action of surviving firms’ international investments, we are able to capture the home-host country
relatedness for international investments and, building on it, the host-country connectedness, and examine their relationship. Our empirical tests provide evidence for the positive effect of host-country connectedness on home-host country relatedness and also support our prediction that the indirect route might be more effective.
Finally we propose a way to measure the betweenness centrality for the countries and provide several illustrations. (For more information, please contact: Sokol Celo, Suffolk University, USA: [email protected])
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AIB 2013 Conference Proceedings Session: 2.3.7 - Special Session