The nasty face of the liability of foreignness: MNCs and rent extraction

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Asli Kozan
Keyword(s):  
Host Country ◽  
Resource Dependence ◽  
Resource Dependence Theory ◽  
The Political ◽  
Power Imbalance ◽  
Liability Of Foreignness ◽  
Political Actor ◽  
Rent Extraction ◽  
Content Type ◽  
Political Actors

Purpose This study aims to clarify the factors that act as a buffer to rent extraction from multi-national corporations (MNCs) in exchange relationships with the host country’s political actors. Design/methodology/approach This study proposes a conceptual model of the factors that determine rent extraction by host country political actors from MNCs. The model identifies the sources of power the MNC can use to alleviate the power imbalance relative to the political actor to decrease rent extraction. Additionally, it identifies the factors that constrain the power-advantaged political actor, thus moderating the relationship between power imbalance and rent extraction. Findings This conceptual paper’s propositions remain for future empirical validation. Originality/value This study integrates insights from the international business literature and resource dependence theory (RDT) to identify the determinants of firm-specific rent extraction risk for MNCs. First, the model sheds light on the heterogeneity among MNCs in their susceptibility to rent extraction and their ability to manage their liability of foreignness in the host country. Second, by integrating the horizontal and vertical distribution of power in the political environment to analyze the power-dependence relationship between the MNC and host country political actors, the framework addresses a shortcoming of RDT and accounts for the dynamics of the external environment for MNCs managing their dependencies. This study also provides a basis for discussing the rent extraction MNCs face worldwide and lays the foundation for future empirical works.

Market distance and insider-ownership strategies: a resource-dependence perspective

2019 ◽  
Vol 57 (11) ◽  
pp. 2958-2977
Author(s):  
Wen-Ting Lin
Keyword(s):  
Corporate Governance ◽  
Host Country ◽  
Resource Dependence ◽  
International Market ◽  
Resource Dependence Theory ◽  
Business Group ◽  
Foreign Direct Investments ◽  
Content Type ◽  
Market Distance ◽  
Managerial Level

Purpose Ownership issues are an important feature of corporate governance when firms focus on global expansion in multiple and diverse regions. Drawing on resource dependence theory (RDT), the purpose of this paper is to address the phenomenon regarding the extent to which international market distance affects equity stakes in group-affiliated firms held by business group headquarters. Design/methodology/approach This study uses longitudinal data on foreign direct investments by 106 business groups (BGs), including 561 group-affiliated firms, from Taiwan over a five-year period from 2006 to 2010. Findings The results show that the equity stakes of the BG headquarters in the group-affiliated firms in foreign markets were positively associated with the geographic distance between the country of the BG headquarters and the host country of the foreign group-affiliated firms, the cultural distance between the country of the BG headquarters and the host country of the foreign group-affiliated firms and institutional distance between the country of the BG headquarters and the host country of the foreign group-affiliated firms. Research limitations/implications Most studies of corporate governance and international business are based on a transaction cost economics approach, a resource-based perspective and agency and institutional theories. In contrast, this study, by using RDT, provides an alternative explanation regarding the factors that affect the equity stakes of parent firms in group-affiliated firms. Practical implications This study presents two basic pieces of advice for consideration. First, at the managerial level, group-affiliated firms should develop their own resources and capabilities in order to become more autonomous in pursuing advantageous international activities that the parent firms may not foresee. Second, and again at the managerial level, business group headquarters should adopt a strategy to balance the dependency relationship between group-affiliated firms and business group headquarters. Originality/value This study provides the most finely grained analysis, to date, regarding how international market distance affects business group headquarters from newly industrialized economies in terms of diverse equity stakes in foreign affiliates, the unique attributes of BGs and international market distances’ relationship with both the operations and the expansion opportunities of BGs.

Constraint absorption in emerging economies: the role of business groups

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mueen Ahmed ◽  
Sankalp Pratap
Keyword(s):  
Emerging Economies ◽  
Resource Dependence ◽  
Resource Dependence Theory ◽  
Power Imbalance ◽  
Resource Based View ◽  
Content Type ◽  
Mutual Dependence ◽  
Dependence Theory ◽  
The Relationship

Purpose The purpose of this paper is to highlight the motivation for firms in emerging economies to engage in constraint absorption. It illustrates the mechanisms that enable business group (BG) affiliated firms to manage interdependencies vis-à-vis standalone firms in emerging economies. Design/methodology/approach The propositions outlined in this study are rooted in the theoretical lens of resource dependence theory (RDT). The authors integrate RDT with the resource-based view and institutional theory to explain the effect of BG affiliation on the relationship between the two types of interdependence (i.e. mutual dependence and power imbalance) and the likelihood of constraint absorption. Findings This paper theorizes that BG affiliation influences the relationship between mutual dependence/power imbalance and the likelihood of constraint absorption. However, if both the firms in a dyad are affiliated to a BG, the likelihood of constraint absorption is likely to be low owing to a process called “co-optation” even if mutual dependence or power imbalance between the firms is high. Originality/value This paper highlights how BG affiliated firms are better at managing contingencies in the external environment vis-à-vis standalone firms. This paper also advises managers that the type of organizational form is an important factor to be considered while engaging in constraint absorption in an emerging economy.

Wining and Dining Government Officials: What Drives Political Networking in Chinese Private Ventures?

2020 ◽  
Vol 16 (5) ◽  
pp. 1084-1113
Author(s):  
Jianjun Zhang ◽  
Pei Sun ◽  
Kunyuan Qiao
Keyword(s):  
Emerging Economies ◽  
Resource Dependence ◽  
Institutional Environment ◽  
Resource Dependence Theory ◽  
Political Activity ◽  
Corporate Political Activity ◽  
Dyadic Relationship ◽  
Political Actors ◽  
Government Relations ◽  
The Government

ABSTRACTManagerial networking with political actors has long been recognized as a crucial co-option strategy to navigate the challenging institutional environment in emerging economies. However, we know much less about what drives the variation of political networking investment by private ventures. Drawing on resource dependence theory, we unpack the dyadic business-government relations and identify the key organizational and environmental factors that shape the power dependence relationships between private ventures and the government. By examining power imbalance and mutual dependence in this dyadic relationship and considering both the necessity and the capability of political networking, we develop hypotheses regarding the ways in which size-, connection-, and location-based dependencies affect firms’ political networking intensity. These hypotheses are tested through a unique survey of Chinese private ventures. Our study finds that political networking intensity (1) has an inverted U-shaped relationship with firm size, (2) is negatively associated with the presence of embedded political ties while positively associated with that of achieved political connections, and (3) is smaller when the focal firm is located in business development zones. This research bears rich implications for our understanding of corporate political activity in emerging economies from a resource dependence lens.

The effect of supplier globalization on firm innovation: a resource dependence theory perspective

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yibo Wang ◽  
Bai Liu
Keyword(s):  
Resource Dependence ◽  
Positive Impact ◽  
Market Competition ◽  
Effective Means ◽  
Resource Dependence Theory ◽  
Institutional Distance ◽  
Foreign Firms ◽  
Firm Innovation ◽  
Content Type ◽  
Dependence Theory

PurposeEither buying or making is predicted by the existing literature for firms to reduce dependence. However, firms in the rapid globalization are found to adopt a pattern of buying and making. Specially, they critically rely on foreign firms for needed materials and goods, and invest in innovation against the uncertainty of potential supply disruptions simultaneously. Therefore, this paper seeks to investigate how the depth and width of supplier globalization shape firm innovation together. Moreover, the moderating effects of institutional distance and market competition are also examined in the paper.Design/methodology/approachGrounded on the resource dependence theory, this paper develops a theoretical framework and tests the proposed hypotheses by Poisson model using secondary data from 502 Chinese listed firms with foreign suppliers.FindingsThe depth of supplier globalization has a positive impact on firm innovation, while the width of supplier globalization weakens firm innovation. The depth and width of supplier globalization further interact negatively to influence firm innovation. Moreover, this relationship is enhanced when firms establish relationships with foreign firms with greater institutional distance and is weakened when firms face fiercer product competition.Originality/valueThe authors contribute to the literature by evidencing that the existence of foreign suppliers results in firms' enhancement of innovation to secure their operations and showing that diversifying the country origins of foreign suppliers is an effective means to reduce firms' uncertainty about supply disruption. We also advance the understanding regarding the contextual factors in which firms are more likely or less likely to manage the uncertainty about supplier globalization.

Hiring decisions on certified manpower

2018 ◽  
Vol 15 (4) ◽  
pp. 514-535
Author(s):  
Huei-Wen Pao ◽  
Cheng-Yu Lee ◽  
Pi-Hui Chung ◽  
Hsueh-Liang Wu
Keyword(s):  
Service Sector ◽  
Resource Dependence ◽  
Management Practice ◽  
Resource Dependence Theory ◽  
Resource Scarcity ◽  
Institutional Innovation ◽  
Social Contagion ◽  
Service Firms ◽  
Hiring Decisions ◽  
Content Type

Purpose The industry-wide adoption of a novel practice is often considered to be an institutional change. Although research on institutionalization has been accumulating, how and why embedded actors in the field become motivated to embrace change that remains sidelined. Viewing the introduction of a new human resource management practice, the recruitment of non-compulsory certified manpower, which is still in its infancy in the service sector of Taiwan, as a new institution, the purpose of this paper is to identify the distinct motives behind firms’ hiring decisions, and examine the extent to which such hiring decisions are contingent on institutional conditions and firm attributes. Design/methodology/approach The data used to test the hypotheses were drawn from a survey on service firms in Taiwan in the second half of 2011. Hypotheses were examined through moderated hierarchical regression analyses in a sample of 254 Taiwanese service firms across major sectors. Findings Integrating the resource dependency and social contagion views, the study contends that resource scarcity drives, or legitimacy enables, service firms to deviate from traditional hiring patterns and instead adopt new preferences toward certified manpower. The study not only shows that social factors should be incorporated into the diffusion of a new HR recruitment practice in the service sector, which is traditionally based upon economic considerations, but also sheds light on the context-dependent nature of the process of institutional innovation. Originality/value This study is an attempt not only to test a dual-theoretical model on the extent to which a service firm’s new hiring pattern is influenced by two distinct types of motivation, but also to evidence how an institutional innovation, in terms of the regime of service manpower certification, takes root and spreads in the field. The managerially discretional account of the resource dependence theory needs to be reconciled with social contagion theory, which highlights the influence of collective actions and so provides a better understanding of the diffusion of new HR recruitment practices in the service industry.

scholarly journals Supply chain strategies in an era of natural resource scarcity

2018 ◽  
Vol 38 (3) ◽  
pp. 784-809 ◽  
Author(s):  
Dimitra Kalaitzi ◽  
Aristides Matopoulos ◽  
Michael Bourlakis ◽  
Wendy Tate
Keyword(s):  
Supply Chain ◽  
Natural Resource ◽  
Resource Dependence ◽  
Empirical Work ◽  
Resource Dependence Theory ◽  
Resource Scarcity ◽  
The Body ◽  
Manufacturing Companies ◽  
Content Type ◽  
Natural Resource Scarcity

Purpose The purpose of this paper is to explore the implications of natural resource scarcity (NRS) for companies’ supply chain strategies. Design/methodology/approach Drawing on the resource dependence theory (RDT), a conceptual model is developed and validated through the means of exploratory research. The empirical work includes the assessment of qualitative data collected via 22 interviews representing six large multinational companies from the manufacturing sector. Findings When the resources are scarce and vitally important, companies use buffering strategies. Buffering and bridging strategies are preferred when there are a few alternative suppliers for the specific resource and when there is limited access to scarce natural resources. Research limitations/implications The research focuses on large multinational manufacturing companies so results may not be generalised to other sectors and to small- and medium-sized firms. Future research needs to examine the implications of NRS for organisational performance. Practical implications This research provides direction to manufacturing companies for adopting the best supply chain strategy to cope with NRS. Originality/value This paper adds to the body of knowledge by providing new data and empirical insights into the issue of NRS in supply chains. The RDT has not been previously employed in this context. Past studies are mainly conceptual and, thus, the value of this paper comes from using a qualitative approach on gaining in-depth insights into supply chain-related NRS strategies and its antecedents.

Initiatives, Referenda and Socialism in Switzerland

1970 ◽  
Vol 5 (3) ◽  
pp. 307-326 ◽  
Author(s):  
Kenneth R. Libbey
Keyword(s):  
Political Culture ◽  
Political Institutions ◽  
Electoral System ◽  
The Political ◽  
Political Environment ◽  
Political Actor ◽  
Political Behaviour ◽  
Political Actors ◽  
Political Forces ◽  
British Labour

POLITICAL INSTITUTIONS IN DEMOCRATIC STATES HAVE USUALLY COME into existence as the manifestation of a principle of political philosophy or as the result of a compromise among forces with different aspirations for the polity. Often both factors have been involved. Certainly the consequences for political behaviour of introducing any particular structure have been of concern to its architects, but many of these consequences are unforeseeable and the actual impact of an institutional change or the character of a formal role may in time become quite different from that intended.For a political actor, such as an individual, an interest group or a party, formal structures are given attributes of the political environment. Along with the more diffuse qualities of the political culture, they constitute the framework within which political actors must compete for influence over public policy. This framework, both formal and informal, is uneven in its effects on the fortunes of the various political forces. It favours some approaches and some groups more and in different ways than it favours others. The British Labour Party, with its concentrated voting strength, is disadvantaged by the single-member district/plurality electoral system, while its counterpart in Germany is able to maximize its strength in a system of proportional representation.

scholarly journals Can Lean and Agile organisations within the UK automotive supply chain be distinguished based upon contextual factors?

2018 ◽  
Vol 23 (3) ◽  
pp. 239-254 ◽  
Author(s):  
Amir Qamar ◽  
Mark Hall
Keyword(s):  
Supply Chain ◽  
Resource Dependence ◽  
Contextual Factors ◽  
Resource Dependence Theory ◽  
Theory And Practice ◽  
Survey Analysis ◽  
Content Type ◽  
Automotive Supply Chain ◽  
Automotive Supply ◽  
Agile Production

PurposeThe purpose of this paper is to robustly establish whether firms are implementing Lean or Agile production in the automotive supply chain (SC) and, by drawing on contingency theory (CT) as our theoretical lens, independently determine whether Lean and Agile firms can be distinguished based upon contextual factors.Design/methodology/approachPrimary quantitative data from 140 firms in the West Midlands (UK) automotive industry were obtained via a constructed survey. Analysis incorporated the use of logistic regressions to calculate the probability of Lean and Agile organisations belonging to different groups amongst the contextual factors investigated.FindingsLean and Agile firms co-exist in the automotive SC and Lean firms were found to be at higher tiers of the SC, while Agile firms were found to be at lower tiers.Originality/valueThe originality of this study lies within the novel methodological attempt used to distinguish Lean and Agile production, based upon the contextual factors investigated. Not only is the importance of CT theoretically approved, but “received wisdom” within SC management is also contested. Extant literature propagates that the automotive SC is comprised of organisations that predominantly adopt Lean production methods, and that in SCs comprised of both Lean and Agile organisations, the firms closer to the customer will adopt more flexible (Agile) practices, while those that operate upstream will adopt more efficient (Lean) practices. The findings from this study have implications for theory and practice, as Lean and Agile firms can be found in the automotive SC without any relationship to the value-adding process. To speculate as to why the findings contest existing views, resource dependence theory and, more specifically, a power perspective, was invoked. The authors provide readers with a new way of thinking concerning complicated SCs and urge that the discipline of SC management adopts a “fourth” SC model, depicting a new Lean and Agile SC configuration.

The emerging role of coopetition within inter-firm relationships

2019 ◽  
Vol 30 (2) ◽  
pp. 414-437 ◽  
Author(s):  
Zach Zacharia ◽  
Michael Plasch ◽  
Usha Mohan ◽  
Markus Gerschberger
Keyword(s):  
Resource Dependence ◽  
Empirical Support ◽  
Resource Dependence Theory ◽  
Structured Interview ◽  
Future Research ◽  
Multiple Perspectives ◽  
Content Type ◽  
Capital Costs ◽  
Interview Process ◽  
A Value

Purpose Increasing environmental uncertainty, more demanding customers, rapid technological growth and rising capital costs have all forced firms to evolve from collaborating with buyers and suppliers to collaborating with their competitors and that is called coopetition. The purpose of this paper is to better understand the antecedents and outcomes associated with coopetition. Design/methodology/approach Building from the existing literature and three theoretical foundations, resource-based theory, resource dependence theory and game theory, the authors develop a model showing the antecedents and outcomes of coopetition and associated propositions of coopetition. Using a semi-structured interview process of 21 industry executives, the authors offer empirical support for the proposed coopetition model and propositions. Findings Firms are increasingly dependent on the knowledge and expertise in external organizations to innovate, solve problems and improve supply chain performance. This research suggests that there is a value for firms to consider coopetition as a part of their inter-firm strategies. Research limitations/implications The semi-structured interview process used in this research provided a wealth of information and executive experiences in coopetition. The interviews, however, only provide a single perspective of collaborative engagements with competitors. Multiple perspectives of each project would add value to this research. Originality/value Collaboration among buyers and suppliers have been well researched; however, there has not been as much research on coopetition. This research provides a new area for future research for academics and offers suggestions for managers to improve the effectiveness and efficiency of their coopetition projects.

scholarly journals Problematizing the presentation and reception of political brands

2019 ◽  
Vol 54 (1) ◽  
pp. 190-211 ◽  
Author(s):  
Christopher Pich ◽  
Guja Armannsdottir ◽  
Dianne Dean ◽  
Louise Spry ◽  
Varsha Jain
Keyword(s):  
Conservative Party ◽  
The Political ◽  
Structured Interviews ◽  
Content Type ◽  
Young Voters ◽  
Political Actors ◽  
Brand Meaning ◽  
Elite Interviews ◽  
The Uk ◽  
Internal Stakeholders

Purpose There are explicit calls for research devoted to how political actors present their brand to the electorate and how this is interpreted. Responding to this, the purpose of this paper is to build an understanding of how political brand messages and values are received and aligned with voter expectations, which in turn shapes the consistency of a political brand. Design/methodology/approach Using an interpretivist perspective, this two-stage approach first focuses on semi-structured interviews with internal stakeholders of the UK Conservative Party and second uses focus group discussions with external stakeholders (voters) of age 18-24 years. Data was collected between 1 December 2014 and 6 May 2015. Findings The findings suggest that the UK Conservative brand had recovered from the “nasty party” reputation. Further, the Conservative brand was perceived as credible, trustworthy and responsible, with positive associations of “economic competence”. However, while the nasty party imagery has declined, the UK Conservative brand continues to face challenges particularly in terms of longstanding negative associations perceived by both internal and external markets. Research limitations/implications It must be acknowledged that all research methods have their own limitations, and acknowledging these will strengthen the ability to draw conclusions. In this study, for example, due to time constraints during the election campaign period, 7 participants supported stage one of the study and 25 participants supported stage two of the study. However, participants from stage one of the study represented all three elements of the UK Conservative Party (Parliamentary, Professional and Voluntary). In addition, the elite interviews were longer in duration and this provided a greater opportunity to capture detailed stories of their life experiences and how this affected their brand relationship. Similarly, participants for stage two focussed on young voters of age 18-24 years, a segment actively targeted by the UK Conservative Party. Practical implications The brand alignment framework can help practitioners illuminate components of the political brand and how it is interpreted by the electorate. The increasing polarisation in politics has made this a vital area for study, as we see need to understand if, how or why citizens are persuaded by a more polarised brand message. There are also social media issues for the political brand which can distort the carefully constructed brand. There are opportunities to evaluate and operationalize this framework in other political contexts. Originality/value The brand alignment model extends current branding theory first by building on an understanding of the complexities of creating brand meaning, second, by operationalizing differences between the brand and how it is interpreted by the electorate, finally, by identifying if internal divisions within the political party pose a threat to the consistency of the brand.

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