Institution building in retreat

2017 ◽  
Vol 24 (3) ◽  
pp. 436-453 ◽  
Author(s):  
Charles Funk ◽  
Len J. Treviño
Keyword(s):  
Institutional Theory ◽  
Host Country ◽  
Multinational Enterprise ◽  
Emerging Economy ◽  
Institution Building ◽  
Host Countries ◽  
Content Type ◽  
Institutional Instability ◽  
Local Institution ◽  
Institutional Relationships

Purpose The purpose of this paper is to describe co-devolutionary processes of multinational enterprise (MNE)/emerging economy institutional relationships utilizing concepts from “old” institutional theory as well as the institutional aspects of socially constructed realities. Design/methodology/approach The authors develop a set of propositions that explore the new concept of a co-devolutionary relationship between MNEs and emerging economy institutions. Guided by prior research, the paper investigates MNE/emerging economy institutional co-devolution at the macro-(MNE home and host countries), meso-(MNE industry/host country regulative and normative institutions) and micro-(MNE and host country institutional actors) levels. Findings MNE/emerging economy institutional co-devolution occurs at the macro-level via negative public communications in the MNE’s home and host countries, at the meso-level via host country corruption and MNE adaptation, and at the micro-level via pressures for individual actors to cognitively “take for granted” emerging economy corruption, leading to MNE divestment and a reduction in new MNE investment. Research limitations/implications By characterizing co-devolutionary processes within MNE/emerging economy institutional relationships, the research augments co-evolutionary theory. It also assists in developing more accurate specification and measurement methods for the organizational co-evolution construct by using institutional theory’s foundational processes to discuss MNE/emerging economy institutional co-devolution. Practical implications The research suggests the use of enhanced regulation, bilateral investment treaties and MNE/local institution partnerships to stabilize MNE/emerging economy institutional relationships, leading to more robust progress in building emerging economy institutions. Originality/value The research posits that using the concepts of institutional theory as a foundation provides useful insights into the “stickiness” of institutional instability and corruption in emerging economies and into the resulting co-devolutionary MNE/emerging economy institutional relationships.

Institution building and institutional voids

2016 ◽  
Vol 11 (1) ◽  
pp. 18-41 ◽  
Author(s):  
Sheila M. Puffer ◽  
Daniel J McCarthy ◽  
Alfred M Jaeger
Keyword(s):  
Economic Growth ◽  
Institutional Theory ◽  
Market Economy ◽  
Emerging Economies ◽  
Emerging Market ◽  
Institution Building ◽  
Institutional Voids ◽  
Formal Institutions ◽  
Content Type ◽  
Bric Countries

Purpose – The purpose of this paper is to present a comparative analysis of institutions and institutional voids in Russia, Brazil, and Poland over the decades of the 1980s through to 2015. The paper asserts that Russia and Brazil could learn much from Poland regarding formal institution building and formal institutional voids that cause problems like corruption and limit economic growth. Design/methodology/approach – A comparative case study approach is utilized to assess the relative success of the three emerging market countries in transitioning to a market economy, viewed through the lens of institutional theory. Findings – Poland’s experience in building successful formal institutions and mitigating major institutional voids can be instructive for Russia and Brazil which have shown far less success, and correspondingly less sustained economic growth. Research limitations/implications – This paper demonstrates the value of applying institutional theory to analyze the progress of emerging economies in transitioning to a market economy. Practical implications – This country comparison can prove valuable to other emerging economies seeking a successful transition to a market economy. Social implications – Since institutions are the fabric of any society, the emphasis on institutions in this paper can have positive implications for society in emerging markets. Originality/value – This paper is an original comparison of two BRIC countries with a smaller emerging economy, utilizing institutional theory. Factors contributing to Poland’s success are compared to Russia and Brazil to assess how those countries might be positively informed by Poland’s experience in building and strengthening sustainable formal institutions as well as avoiding institutional voids and their associated problems.

Impact of corruption on Chinese investment in African countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shilin Yuan ◽  
Haiyang Chen ◽  
Wei Zhang
Keyword(s):  
Developing Countries ◽  
Developing Country ◽  
Host Country ◽  
Practical Implication ◽  
Host Countries ◽  
African Countries ◽  
Control Variables ◽  
Content Type ◽  
The Impact ◽  
New Evidence

Purpose This paper aims to examine the impact of host country corruption on foreign direct investment (FDI) from China to developing countries in Africa. With the opposing arguments that corruption is detrimental to or instrumental in FDI and mixed empirical evidence, this paper contributes to the literature by providing new evidence on the issue. Additionally, little research has been done on the impact of corruption on FDI made by developing country multinationals to developing countries. This paper fills a void in this area. Design/methodology/approach Based on the published literature, as well as China and Africa contexts, the authors develop hypotheses that host countries with low corruption receive more FDI and resource-seeking investments weaken the relationship. The annual stock of Chinese FDI in 35 African countries, host country corruption data and other control variables from 2007 to 2015 are collected. Feasible generalized least squares models are used to test the hypotheses. Additional robustness tests are also conducted. Findings The findings support the hypotheses. Specifically, Chinese investors make more investments in host countries with low corruption except for resource-seeking investments in resource-rich host counties. The results are statistically significant accounting for various control variables. The results of the robustness tests show that the main findings are robust. Originality/value First, this study provides new evidence on the impact of corruption on FDI. Second, this study also fills a void by examining FDI from a developing country, China to other developing countries in Africa. Finally, this study also has a practical implication for Chinese multinationals investing in Africa.

Strategic motives, institutional environments, and firm’s FDI ownership

2017 ◽  
Vol 25 (4) ◽  
pp. 307-327 ◽  
Author(s):  
Yigang Pan
Keyword(s):  
Host Country ◽  
Interaction Effects ◽  
Annual Reports ◽  
Institutional Environments ◽  
Host Countries ◽  
Content Type ◽  
Listed Firms ◽  
High Level ◽  
Strategic Motives ◽  
Subsidiary Ownership

Purpose The study conceptualizes how firms’ strategic motives interact with the heterogeneity of host country institutional environments in determining the subsidiary ownership. The author hypothesizes and tests two interaction effects. The study found that firms with market-seeking motives are more affected by the heterogeneity of host country institutional environments, while firms with resource-seeking motives are less affected by the heterogeneity. The empirical findings are based on a sample of overseas subsidiaries reported in the annual reports of listed firms in China. Design/methodology/approach In this study, an empirical investigation was conducted using a sample of subsidiaries of listed firms in China. The data were compiled from 2012 annual reports of listed firms in China. The sample consists of 2,270 subsidiaries of these firms. Findings The study conceptualizes that firms with market-seeking motives and resource-seeking motives are influenced differently by the heterogeneity of host country institutional environments in determining their subsidiary ownership. We hypothesize two interaction effects. Firms with market-seeking motives are more subject to the heterogeneity of host country institutional environments in determining their FDI ownership level. In contrast, firms with resource-seeking motives are less subject to this heterogeneity. The findings largely supported the study’s hypotheses. Originality/value This study fills an important gap in the literature by incorporating the interaction between strategic motives and host country environments in the analysis of subsidiary ownership. The findings of the study suggest that firms with a market-seeking motive are more particular about the host country institutional environments. They will acquire a high level of ownership in host countries with attractive institutional environments. In contrast, firms with resource-seeking motive are less concerned with the host country institutional environments. Their decision on subsidiary ownership is less affected by the variance in host country institutional environments. This study adds to the stream of studies that have examined outward investments of firms from emerging economies, particularly the outward expansion of Chinese firms with different strategic motives.

An investigation of Confucius Institute’s effects on China’s OFDI via cultural difference and institutional quality

2020 ◽  
Vol 14 (3) ◽  
pp. 241-263
Author(s):  
Chensheng Xu ◽  
Feng Yao ◽  
Fan Zhang ◽  
Yonghong Wang
Keyword(s):  
Host Country ◽  
Cultural Difference ◽  
Institutional Quality ◽  
Cultural Exchange ◽  
Ordinary Least Squares ◽  
Study Strategies ◽  
Potential Interaction ◽  
Host Countries ◽  
Content Type ◽  
The Impact

Purpose This study aims to investigate the influence of the Confucius Institute (CI) on outward foreign direct investment (OFDI) by China and its potential interaction with cultural difference and institutional quality in host countries. Design/methodology/approach In the empirical study, the gravity model is adopted as the benchmark to investigate the effects of CI on China's OFDI using the ordinary least squares or Poisson Pseudo Maximum Likelihood estimators. Panel data on China's OFDI from 2004 to 2015 are used. Cultural difference and institutional quality are included explicitly as control variables to examine the effects of CI on China's OFDI. Findings CI has a significant positive effect on China’s OFDI, and this effect depends on the cultural difference and institutional quality of the host country. The impact of CI on China’s OFDI is more prominent in host countries with a smaller cultural difference or lower institutional quality. Originality/value CI is a comprehensive platform for foreign cultural exchange and signifies the rebirth of Confucianism in China. The present study shows that CI can stimulate the growth of China’s OFDI, with implications for other Asian countries influenced by Confucianism. Based on the results of the study, strategies for “Going Global” and encouraging economic growth based on cultural exchange and the recognition of host country heterogeneities are proposed.

Impact of host country institutional context on subsidiary performance

2015 ◽  
Vol 53 (1) ◽  
pp. 198-220 ◽  
Author(s):  
Chinmay Pattnaik ◽  
SoonKyoo Choe ◽  
Deeksha Singh
Keyword(s):  
Labor Market ◽  
Host Country ◽  
Institutional Quality ◽  
New Institutional Economics ◽  
Institutional Distance ◽  
Host Countries ◽  
Subsidiary Performance ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this paper is to examine the impact of quality of market supporting institutions (institutional quality) in host country and the similarities and differences of institutional quality between the home and host country (institutional distance) on subsidiary performance. Design/methodology/approach – Based on the conceptualization of new institutional economics, the authors divide quality of host country institutions into factor markets; product, capital, labor market and sociopolitical dimensions. The authors examine the impact of the quality these institutional dimensions in host countries and their difference between home and host country on the performance of 318 subsidiaries of 146 Korean listed manufacturing firms operating in 28 host countries from 2001 to 2006. Findings – The empirical results based on 1,129 observations show that institutional distance explains a significant variance in the subsidiary performance. In particular, the difference in quality of institutions in product, capital and labor market has negative impact on subsidiary performance. However, except for quality of regulation in labor market, host country institutional qualities do not significantly explain the variation in subsidiary performance. Originality/value – The evidence suggests that host country institutions matter substantially when considered with their relative similarity and difference with home country institutions. The impact of individual dimensions of institutions varies on subsidiary performance.

scholarly journals The provisioning of collective goods by MNEs in emerging markets

2017 ◽  
Vol 1 (1) ◽  
pp. 4-19 ◽  
Author(s):  
Jean J. Boddewyn
Keyword(s):  
Multinational Enterprise ◽  
Emerging Economy ◽  
Public Affairs ◽  
Research Attention ◽  
Content Type ◽  
Private Ordering ◽  
Goods And Services ◽  
Collective Goods ◽  
Managerial Implications ◽  
Ordering Systems

Purpose This paper aims to determine the essential “collective goods” which a foreign multinational enterprise (MNE) must have before production can start in a remote area of an emerging economy, and to consider the alternative governance modes available to procure or create these goods. Design/methodology/approach This purpose is examined conceptually and theoretically. First, the concept of “collective goods” is presented, followed by a consideration of the traditional “buy, ally or make” contractual approaches available to obtain goods and services. These approaches are repositioned in the context of an “emerging economy” so that alternative “ordering systems” as well as “non-contractual” means of obtaining things have to be considered in the context of internalization and reciprocity theories. Findings It is difficult to obtain collective goods in remote areas of emerging economies where private ordering prevails and even succeeds but at high transaction costs and with substantial government intervention. However, the use of non-contractual modes of exchange such as reciprocity is available to facilitate exchanges between market MNEs and nonmarket state offices and civil-society associations such as non-governmental organizations with which collaboration is necessary but which cannot be acquired or controlled by MNEs. However, market firms can use philanthropy and lobbying to obtain the help of these nonmarket actors who know how to operate under private and state-ordering systems. Research limitations/implications Theoretical implications: Internalization theory explains why MNEs are able to obtain collective goods by providing them “in-house”, while reciprocity theory exemplifies how non-contractual modes of exchange can substitute for the traditional but contractual “buy, ally and/or make”. Practical implications Managerial implications: In terms of the organizational structure of the subsidiary of an MNE operating in an emerging economy, it appears that the line functions of procurement, engineering and production may rely more on contractual exchanges with foreign suppliers, while the staff functions of public affairs, government relations and human resources may be more adept at using reciprocal exchange with local suppliers. Originality/value The provisioning of the collective goods when a firm builds its facilities in a remote and underdeveloped part of an emerging economy has hardly received any research attention nor have the non-contractual ways – such as reciprocity – available in the context of private ordering to obtain these goods.

Post-migration labor market: prejudice and the role of host country education

2019 ◽  
Vol 7 (1) ◽  
pp. 42-55
Author(s):  
Olga Stangej ◽  
Inga Minelgaite ◽  
Kari Kristinsson ◽  
Margret Sigrun Sigurdardottir
Keyword(s):  
Labor Market ◽  
Social Integration ◽  
Host Country ◽  
Small Sample Size ◽  
Small Sample ◽  
Host Countries ◽  
Content Type ◽  
Diverse Workforce ◽  
Integration Of Immigrants ◽  
Workforce Composition

Purpose The purpose of this paper is to examine how prejudice in a post-migration labor market can be mitigated, specifically, whether education received in the host country can serve as a signal of social integration for immigrant workers in employment settings. Design/methodology/approach The authors conducted an audit discrimination study, using an experimental setup to examine the interplay between prejudice and education as a signal of the social integration of immigrants in employment settings. Findings The results of the study indicate that signals of social integration, such as, qualifications acquired in the host country through education, counter prejudice against Polish immigrants in Iceland. Research limitations/implications The study provides evidence that immigrants are subjected to prejudice that can restrain their employment opportunities. The acquisition of education in the host country can mitigate this effect, but also diminishes the line between social integration and assimilation. However, the study is limited by a relatively small sample size and a single-country context. Practical implications The study offers insights for both countries and organizations worldwide that are facing the need to successfully embrace a mobile workforce and the challenge of a diverse workforce composition. Originality/value The study addresses the under-researched effects of education on human capital transferability in the host labor market. More specifically, it uncovers that the differentiation between education acquired in the home country and education acquired in the host country is a signal that can mitigate prejudice and its effects on the employment of immigrants in the host countries.

Multilateral knowledge transfer and multiple embeddedness

2014 ◽  
Vol 22 (2) ◽  
pp. 155-175 ◽  
Author(s):  
Yen-Chen Ho
Keyword(s):  
Knowledge Transfer ◽  
Host Country ◽  
Organizational Design ◽  
Multinational Enterprise ◽  
Global Strategy ◽  
Content Type ◽  
Multi Level ◽  
External Embeddedness ◽  
Subsidiary Evolution

Purpose – The purpose of this paper is to argue that multilateral knowledge transfer emerges from two lines of thinking in the international business (IB) literature – the exploitation of multinationality and the contributory role of subsidiaries – and links three levels of analysis – headquarters, knowledge-creating subsidiaries and host-country environments. Design/methodology/approach – Multilateral knowledge transfer, both vertical and horizontal, is considered in this paper as a cross-level phenomenon that emerges as a result of beneficial interdependencies between headquarters, knowledge-creating subsidiaries and their host-country environments. The paper also discusses the concept of embeddedness, which both lines of thinking draw upon, and argues that the multinational enterprise (MNE) headquarters can actually moderate both internal and external embeddedness through global strategy and organizational design. Findings – By putting forward an integrative cross-level interdependency framework that incorporates insights from the R&D internationalization literature and the subsidiary evolution literature, this paper delineates multilateral knowledge transfer as an MNE strategy to systematically transform and integrate knowledge created at the subsidiary-level for the global competitive advantage at the MNE group-level. Originality/value – Such a perspective reemphasizes the multi-level nature of IB studies and provides new opportunities for theoretical and empirical development as did the internalization theory which has theorized the conventional headquarters-to-subsidiaries knowledge transfer more than 40 years ago.

Exploiting emerging market complementarities

2019 ◽  
Vol 27 (1) ◽  
pp. 54-76 ◽  
Author(s):  
Nic Robertson ◽  
John M. Luiz
Keyword(s):  
Emerging Markets ◽  
New Technologies ◽  
Emerging Market ◽  
Multinational Enterprise ◽  
Media Technology ◽  
Host Countries ◽  
Content Type ◽  
The Usa ◽  
Market Opportunities ◽  
African Media

PurposeThis paper aims to explore the delayed, then accelerated, internationalisation of an emerging multinational enterprise (EMNE), with a particular focus on the media technology sector, and how it exploited complementarities between emerging markets.Design/methodology/approachThe research is qualitative in nature and focuses on the expansion of a South African media technology EMNE case study that has a footprint in over 130 countries and has one of the largest market capitalisations of any media company outside the USA and China.FindingsEMNEs have unique capabilities in navigating uncertain institutional environments in emerging markets and are able to capitalise upon the institutional complementarities between their home and host countries. This may facilitate the recognition of market opportunities and the harnessing of new technologies to meet these opportunities in complementary markets for accelerated internationalisation.Practical implicationsEMNEs must capitalise upon the institutional complementarities between home and host country locations and use this to take advantage of identified market opportunities. This creates the possibility for a process of accelerated internationalisation. New technologies are creating particular market opportunities in emerging markets which can be exploited by EMNEs.Originality/valueThe authors provide a framework which illustrates how an EMNE can exploit complementarities between emerging markets to identify market opportunities, capitalise upon institutional similarities and harness new technologies in the process.

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