scholarly journals Governmental goals and the international strategies of state-owned multinational enterprises: a conceptual discussion

2021 ◽  
Author(s):  
Asmund Rygh ◽  
Gabriel R. G. Benito
Keyword(s):  
Corporate Governance ◽  
Host Country ◽  
Multinational Enterprises ◽  
Empirical Studies ◽  
State Ownership ◽  
Institutional Pressures ◽  
Strategic Decisions ◽  
Entry Modes ◽  
International Strategies ◽  
Degree Of Internationalization

AbstractState owned multinational enterprises (SOMNEs) have received extensive attention in recent research in international business and corporate governance, which demonstrates effects of state ownership on a range of international strategic decisions such as the degree of internationalization, foreign entry modes, and host country location choices. Such effects are explained by factors such as SOMNEs’ non-financial goals, corporate governance, and institutional pressures. However, results are mixed and context-dependent, and overall we still have an incomplete understanding of what governments aim to achieve through SOMNEs, and how these goals in turn lead to different international strategies. This conceptual article aims to explore how specific government goals may affect international strategies. We provide a more fine-grained view on SOMNE financial and non-financial goals and link them to key international strategic decisions such as the degree of internationalization, entry and establishment modes, and host country location choice. We review and extend previous literature and identify novel theoretical arguments, leading to an extensive set of propositions. We also sketch ideas for empirical studies of SOMNE objectives.

scholarly journals SOEs ownership and control: Independence and competence of boards members

2010 ◽  
Vol 8 (1) ◽  
pp. 720-740 ◽  
Author(s):  
Luca Gnan ◽  
Alessandro Hinna ◽  
Danila Scarozza ◽  
Fabio Montaduro
Keyword(s):  
Corporate Governance ◽  
Social Role ◽  
Empirical Studies ◽  
Critical Role ◽  
State Ownership ◽  
Board Independence ◽  
Public Governance ◽  
The Public ◽  
Formal Control ◽  
And Control

The public presence is a feature of the European countries. Reforms of State-Owned Enterprises asked for more autonomy and new formal control systems. In OECD countries, SOEs cover a significant economical and social role. However, SOEs raise some issues. They present inefficiencies and low profitability, related to their poor corporate governance, in particular with respect of the board’s role. Ownership is a key variable underlying different corporate governance regimes, but very few empirical studies investigate the influences of state ownership on board’s composition. Two attributes are particularly relevant: board independence and competence. The paper aims at highlighting: (1) the components that assign a critical role to a SOE’s board; (2) the specificities of independence and competence in a public governance perspective; (3) the effects of the ownership structure on these attributes. Hypotheses are tested on a sample of 29 firms of the 30 Italian SOEs directly managed by the Italian Ministry of Economics and Finance.

scholarly journals The influence of political risk, inertia and imitative behavior on the location choice of Chinese multinational enterprises

2018 ◽  
Vol 13 (3) ◽  
pp. 518-535 ◽  
Author(s):  
Diego Quer ◽  
Enrique Claver ◽  
Laura Rienda
Keyword(s):  
Host Country ◽  
Multinational Enterprises ◽  
Location Choice ◽  
Political Risk ◽  
State Ownership ◽  
Government Support ◽  
Chinese Firms ◽  
Content Type ◽  
Mimetic Behavior ◽  
Chinese Multinational Enterprises

Purpose Drawing on the institutional perspective, the purpose of this paper is to investigate how state ownership moderates the relationships between political risk, inertia and mimetic behavior, and the location choice of Chinese multinational enterprises (MNEs). Design/methodology/approach The authors argue that state ownership leads Chinese firms to behave toward political risk in an unconventional way, and that government support makes them less dependent on their own and other Chinese firms’ prior host country experience. The authors tested the hypotheses using data on outward foreign direct investment (OFDI) decisions made by 186 Chinese firms in 93 countries. Findings The authors found that Chinese state-owned enterprises (SOEs), compared to non-SOEs, are more likely to move into countries with high political risk, and that they are less likely to be inertial and mimetic. Originality/value Building on the distinction between macro- and micro-political risk, The authors contribute to the political risk literature by developing several arguments that explains why political risk varies across investing firms in a given host country. Moreover, this is one of the first studies of its kind to investigate the moderating effect of state ownership on the relationship between inertial and mimetic behavior, and the location choice of Chinese MNEs.

International Strategy and Institutional Environments

2016 ◽  
Vol 23 (2) ◽  
Author(s):  
Michael A. Hitt
Keyword(s):  
Multinational Enterprises ◽  
Design Methodology ◽  
Foreign Market ◽  
Institutional Distance ◽  
International Strategy ◽  
Institutional Environments ◽  
Strategic Decisions ◽  
Formal Institutions ◽  
Institutional Complexity ◽  
International Strategies

Purpose Country institutions have become of heightened importance for firms’ international strategies in recent years. Herein, I review the reasons for the growing importance of institutional environments and examine how they influence the international strategies of multinational enterprises (MNEs). There have been significant changes in the global, economic and competitive landscapes in recent years. These changes are examined. Design/methodology/approach Three critical and interrelated changes in the global competitive landscape are identified. They include (1) more interconnected (interdependent) national economies, (2) a significantly larger number of multinational firms and (3) growing importance of emerging economies (and their MNEs). These changes have increased the importance of countries institutional environments. Country institutions, both formal institutions (codified and explicit rules and standards that shape behavior) and informal institutions (Shared norms that guide cohesive behaviors) are examined. I explain the influences of institutional complexity, institutional distance and geographic regions on firms’ international strategies. Findings Research has shown that both culture (informal institution) and formal institutions are interrelated and affect firms’ strategies. And, while specific institutions such as intellectual property protection (law and enforcement) are important, the collective influence of institutions has a critical influence on firms’ international strategies. And, institutions are multilevel (national, regional and local-municipal). The institutional complexity (combined effects of multiple institutions and their diversity) is carefully considered in executives’ strategic decisions. When firms consider entering a new foreign market, they also consider the institutional distance between the home and host countries. The differences in culture and in formal institutions compose the institutional distance and affect whether and how firms enter these markets. Greater institutional distance contributes to the liabilities of foreignness the challenges of which must be managed effectively to succeed in the new market. And the effects of institutional distance are asymmetric depending on whether the firm’s home country institutions are stronger/more developed or weaker/less developed than the host country institutions. Finally, many firms follow regional international strategies in which they invest in selected regions of the world. Recent research suggests firms enter regions that have attractive institutional profiles and engage in institutional arbitrage across the countries in those regions. Research limitations/implications This essay provides the base for additional research by identifying a number of important research questions on institutions and international strategy. Originality/value This essay highlights the importance of institutions for firms’ strategies. Understanding institutions and their influence contributes to more effective executives’ strategic decisions and more effective national and international policies.

Investments by Emerging-Market Multinationals in Other Emerging Markets

2018 ◽  
pp. 630-656
Author(s):  
Jing Li ◽  
Daniel Shapiro
Keyword(s):  
Sustainable Development ◽  
Corporate Governance ◽  
Emerging Economies ◽  
Multinational Enterprises ◽  
Emerging Market ◽  
Institutional Development ◽  
Spillover Effects ◽  
Investment Strategy ◽  
Future Research ◽  
Foreign Direct Investments

This chapter reviews the literature on foreign direct investments among emerging economies (E-E FDI), focusing on the motivations behind E-E FDI, country-specific advantages and firm-specific advantages associated with emerging-economy multinational enterprises (EMNEs), and spillover effects of E-E FDI on host-country economic and institutional development. We identify the following topics as posing important questions for future research: EMNEs’ ability to leverage home-government resources and diplomatic connections to promote investment in other emerging economies; nonmarket strategies of EMNEs in emerging economies; ownership and corporate governance affecting investment strategy and performance of EMNEs; E-E FDI contributions to sustainable development in host countries. Future studies should also consider potential heterogeneity among EMNEs by integrating insights from institutional theory, network theory, political science, corporate governance, corporate social responsibility, and sustainable-development research.

scholarly journals Chinese Service Multinationals: The Degree of Internationalization and Performance

2021 ◽  
Author(s):  
Ziyi Wei ◽  
Quyen T. K. Nguyen
Keyword(s):  
Financial Performance ◽  
Multinational Enterprises ◽  
Home Country ◽  
Academic Research ◽  
Brand Names ◽  
Theoretical Development ◽  
Superior Performance ◽  
Foreign Firms ◽  
Service Firms ◽  
Degree Of Internationalization

AbstractWe investigate the degree of internationalization of Chinese service multinational enterprises (MNEs) and their performance relative to global peers operating in the same industries, using the benchmarking method with the industry financial data. Our theoretical development is based upon Verbeke and Forootan (2012)’s framework, grounded in “new” internalization theory, arguing that an MNE’s financial performance is fundamentally determined by its firm-specific advantages (FSAs). Here FSAs include not only conventional strengths in R&D and brand names, but also the recombination capabilities, which is a higher-order FSA. We theorize that Chinese service MNEs develop FSAs, which are built upon home country-specific advantages (CSAs) and thus their FSAs are home country-bound in nature. They have not yet been able to develop advanced management capabilities through recombination with host CSAs. We empirically examine the largest 500 Chinese service firms. We find that only 23 Chinese service firms are true MNEs, whereas the majority of them are purely domestic firms. The financial performance of Chinese service MNEs is poor relative to global peers. They internationalize mainly through acquisitions of foreign firms, which help them increase their foreign sales, but they are not able to achieve superior performance in overseas operations. We discuss the strategic implications of our findings for managers, public policy makers, and academic research.

scholarly journals Early global Trotters and their entrepreneurial employment practices

2016 ◽  
Vol 8 (3) ◽  
pp. 378-384 ◽  
Author(s):  
Qianqian Chai ◽  
Cherry Wun Mei Cheung ◽  
Caleb Kwong
Keyword(s):  
Host Country ◽  
Multinational Enterprises ◽  
Design Methodology ◽  
Wage Differential ◽  
Governance Structure ◽  
Employment Practices ◽  
Content Type ◽  
Blue Book ◽  
Host Country Nationals ◽  
Internal Context

Purpose Questions have often been asked of the ethicality of multinational enterprises (MNEs) with the conducts of many being classified as exploitative. This is particularly so the internal context, where MNEs are often reluctant to employ host country nationals at important positions and treat their host and parent countries employees differently. This study aims to examine whether the locals are really getting the raw end of the deal. Design/methodology/approach Utilising a unique record book that is available about the employment details of civil servants in Hong Kong known as the blue book, this study intends to examine whether first-moving multinational organisations treated their local employees in an ethical and reasonable manner, for the employees entering the service between 1845-1850. Findings The data suggests that, overall, host country nationals earn much less than not only the British but also those from third countries. Moreover, parent country nationals were placed at important officer and supervisory roles, as oppose to host country nationals at the bottom, forming a typically ethnocentric governance structure (Perlmutter, 1969). Furthermore, even divided by grade, the starting salary difference between host and parent country nationals remain considerable. However, the reason for this is complex, and the authors do not have a quick and precise answer as to whether there has been discrimination. Research limitations/implications The findings perhaps explain the dilemma faced by the early-movers because they tend to feel the strong need of adopting an ethnocentric approach, which can be extremely costly as a result of the large wage differential. A balance needs to be struck between this and utilising host country nationals, which might not necessarily possess all the essential qualities but might be cheaper. Originality/value This is the first study examining the employment practices of fast-moving MNEs.

Another failed M&A: misaligned business models as culprit

2017 ◽  
Vol 38 (5) ◽  
pp. 18-26
Author(s):  
Gaël Le Floc’h ◽  
Laurent Scaringella
Keyword(s):  
Customer Value ◽  
Multinational Enterprises ◽  
Business Models ◽  
Small And Medium Enterprises ◽  
Empirical Studies ◽  
Empirical Literature ◽  
Content Type ◽  
Recent Debate ◽  
Definition Of ◽  
Medium Enterprises

Purpose Literature on business models (BMs) has grown ve ry rapidly since the beginning of the twenty-first century, and although the theoretical and empirical literature has developed significantly, the number of practical and management-oriented studies remains relatively low. A recent debate in the field has focused on the definition of BM invariants: sensing customer needs, creating customer value, sustaining value creation and monetizing value. Extant empirical studies have mainly focused on multinational enterprises (MNEs) and successful BMs; however, this study concentrates on the failure of BMs in the case of small and medium enterprises (SMEs). An important source of a BM’s failure is the misalignment between MNE and SME involved in an acquisition. Design/methodology/approach Looking through the lens of the four BM constants, the aim of this study is to examine the case of the acquisition Domestic Heating (an SME) by Ventilair (an MNE). Findings Although both separate entities were achieving good results and each had a specific BM, the acquisition produced poor results mainly due to the misalignment of the two BMs. The findings lead the authors to make recommendations to practitioners on avoiding BM misalignment during an acquisition. Originality/value The authors encourage practitioners to enhance communication, promote organizational experiments, acknowledge specificities of both entities, foster employee commitment and ensure homogeneity in IT system usage.

scholarly journals Corporate Income Shifting in an Era of Tax Multilateralism: The Impact of Exchange-of-Information Agreements

2021 ◽  
Vol 69 (2) ◽  
pp. 357-389
Author(s):  
Devan Mescall ◽  
Paul Nielsen
Keyword(s):  
Multinational Corporations ◽  
Multinational Enterprises ◽  
Transfer Pricing ◽  
Empirical Studies ◽  
Annual Reports ◽  
Income Shifting ◽  
Exchange Of Information ◽  
Pricing Rules ◽  
Using Data ◽  
The Impact

Using data from the annual reports of over 100,000 subsidiaries of multinational enterprises (MNEs) from 55 countries between 2003 and 2012, the authors of this article investigate the impact of exchange-of-information agreements ("EOI agreements") on tax-motivated income shifting. Transparency created by the signing of EOI agreements is expected to reduce the tax-motivated shifting of income by multinational corporations. Whether such agreements affect the income-shifting behaviour of multinational corporations is an unanswered question. The authors find evidence that, on average, EOI agreements do have an impact on tax-motivated income shifting. Additionally, they find that more advanced, modern EOI agreements are associated with a larger decrease in tax-motivated income shifting compared to the impact of early EOI agreements. This evidence challenges the prevalent assumption in empirical studies that EOI agreements are homogeneous. Supplemental analyses suggest that factors that affect the information asymmetry between MNEs and tax authorities, such as corporations with high levels of intangibles and tax authorities with strong transfer-pricing rules and enforcement, can diminish or enhance the effectiveness of EOI agreements in moderating tax-motivated income shifting. The evidence provided by this study shows that consideration of the tax authorities' information environment and the substance of an EOI agreement is essential when assessing the impact of such an agreement on the tax behaviour of sophisticated taxpayers such as multinational corporations.

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