Home country institutional impact on the choice of direct vs indirect exports: an emerging markets perspective

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
B. Elango ◽  
Nitin Pangarkar
Keyword(s):  
Home Country ◽  
Emerging Market ◽  
Uncertainty Avoidance ◽  
Firm Level ◽  
Content Type ◽  
Second Stage ◽  
Export Strategy ◽  
Scant Attention ◽  
Institutional Impact ◽  
The Relationship

PurposeThis study uses the notions of institutional harshness and uncertainty avoidance in the home country to explain the choice between direct and indirect exporting strategies by emerging market firms.Design/methodology/approachThis study is based on a dataset of 23,256 observations on firms from 32 countries spread over 11 years (2006–2016). Since only some firms undertake exports, the Heckman procedure is used to control for sample self-selection. In the first stage, we predict which firms will choose to export, and, in the second stage, we examine the factors driving the choice made by firms involved in exports between direct and indirect exports strategies.FindingsThe analyses reveal that firms are more likely to choose direct exports when institutional harshness is high and when they are from countries with low uncertainty avoidance. We also find that the strength of the relationship between institutional harshness and the choice of direct exports is moderated at high levels of uncertainty avoidance.Research limitations/implicationsWhile this study's empirical models account for many firm-level factors as well as home country differences discussed in the literature, we acknowledge there could be other temporal, firm or country idiosyncratic factors not included in our analysis driving the key choices examined in the paper.Originality/valueThis study makes three contributions to exporting literature. First, it highlights the drivers of the choice between direct and indirect exports. This choice is an important facet of exporting strategy and has received scant attention in prior IB research. Second, it demonstrates how the choice between direct and indirect exports is impacted by the degree of the home country's institutional harshness and uncertainty avoidance. Third, it offers insights on how the interaction of formal and informal home market institutional factors influences export strategy.

Ownership participation of cross-border mergers and acquisitions by emerging market firms

2015 ◽  
Vol 53 (1) ◽  
pp. 221-246 ◽  
Author(s):  
Monica Yang
Keyword(s):  
Mergers And Acquisitions ◽  
Cultural Distance ◽  
Emerging Market ◽  
Foreign Market ◽  
Foreign Market Entry ◽  
Firm Level ◽  
Content Type ◽  
Cross Border ◽  
Emerging Market Firms ◽  
The Relationship

Purpose – The purpose of this paper is to adopt a multi-level approach to investigate what factors shape the content of emerging market firms’ foreign market entry decisions, particularly the ownership participation in cross-border mergers and acquisitions (M&As). In addition, the author would like to know if companies from emerging markets that possess higher (or lower) ownership in cross-border M&As receive higher valuation in the market. Design/methodology/approach – Using panel data of cross-border M&As by emerging market firms from 2000 to 2012, the author tests the hypothesized effects of the independent variables on the level of ownership participation; and uses a standard event study methodology to assess the market reaction of a particular cross-border M&A deal. Findings – The author finds that a country-level factor (institutional distance), an industry-level factor (industry unrelatedness) and a firm-level factor (board concentration) have significant impact on ownership participation in cross-border M&As. The author also finds that investors do give high valuation to those emerging market firms that chose high ownership participation in cross-border M&As. However, the author did not finds the support for the relationship between ownership participation and cultural distance. Neither did the author finds the support for the relationship between ownership participation and board independence. Originality/value – This study enhances the understanding of conditions under which the level of ownership participation in cross-border M&As would increase (decrease) and how the market reacts to high (low) ownership participation of cross-border M&As by emerging market firms.

How does liability of origin influence cross-border acquisition completion? Evidence from Chinese firms

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tingting Jiang ◽  
Buyun Yang ◽  
Bo Yang ◽  
Bo Wu ◽  
Guoguang Wan
Keyword(s):  
Multinational Enterprises ◽  
Home Country ◽  
Emerging Market ◽  
Organizational Legitimacy ◽  
Binary Logistic Regression Model ◽  
Firm Level ◽  
Content Type ◽  
Low Level ◽  
Cross Border ◽  
Chinese Mnes

Purpose The environment of international business (IB) and the capabilities of emerging market multinational enterprises (EMNEs) as well as their home countries have changed significantly, leading to some new features of liability of origin (LOR). This paper aims to extend the LOR literature by particularly focusing on the LOR of Chinese multinational enterprises (MNEs) and by taking into account the heterogeneity among industries and across individual MNEs. Design/methodology/approach Based on the stereotype content model and organizational legitimacy perspective, this study explores how LOR influences Chinese MNEs’ cross-border acquisition completions. Several hypotheses were tested by using a binary logistic regression model with panel data techniques based on data of 780 Chinese MNEs’ acquisition deals between 2008 and 2018. Findings The results of this study show that when the competence dimension of China’s LOR is perceived as high in the host country, Chinese MNEs are less likely to complete cross-border acquisitions. Moreover, deals are less likely to be completed when the warmth dimension of China’s LOR is perceived to be low. Global experience and the foreign-listed status of individual Chinese MNEs can alter the relationship between the LOR and deal completions. Originality/value This study advances and enriches the LOR research. It shows that a high level of competence in the home country has led to LOR for Chinese MNEs rather than the low level of competence proposed by existing LOR studies; and the LOR for Chinese MNEs is also determined by the perceived low level of warmth in the home country resulting from the geopolitical conflicts between two countries. In addition, the LOR suffered by EMNEs could vary based on certain industry- and firm-level characteristics. The findings of this study provide important practical implications for emerging economy governments and for firms intending to go abroad.

scholarly journals The role of firm characteristics on the relationship between gender diversity and firm performance

2016 ◽  
Vol 54 (6) ◽  
pp. 1407-1419 ◽  
Author(s):  
Mehmet Nihat Solakoglu ◽  
Nazmi Demir
Keyword(s):  
Firm Performance ◽  
Emerging Market ◽  
Gender Diversity ◽  
Firm Level ◽  
Content Type ◽  
Specific Factors ◽  
And Performance ◽  
The Relationship ◽  
Measures Of Performance

Purpose – The purpose of this paper is to understand the effect of gender diversity on firm performance and evaluate how that relationship is influenced by some firm-specific factors for firms in an emerging market. Design/methodology/approach – The authors collected firm level financial data and firm level characteristics for the firms listed in BIST100 index of Borsa Istanbul for the period between 2002 and 2006. Due to endogeneity of gender diversity and firm performance, the authors utilize unbalanced panel data with 2SLS specification. To observe the sensitivity of results across measures of performance, three measures of performance, two accounting-based and one market-based, are utilized. Findings – Overall, the authors find some weak evidence that gender diversity impacts firm performance. In particular, the findings imply significant association between gender diversity and firm performance for firms that are targeting local markets, for firms in the financial sector and for firms that are family or block-owned. Moreover, findings are fragile with respect to the measures of diversity and performance selected. Originality/value – Although the relationship between gender diversity and firm performance are investigated several times in the past, there are not many studies that examines the role of firm-specific factors on that relationship. By revealing the factors that are important, this study provides an explanation why the existing literature leads to mixed results.

scholarly journals The effects of past satisfaction and commitment on the future intention to internationalize

2016 ◽  
Vol 11 (2) ◽  
pp. 256-272
Author(s):  
Jase R Ramsey ◽  
Livia Barakat ◽  
Matthew C. Mitchell ◽  
Thomas Ganey ◽  
Olesea Voloshin
Keyword(s):  
Positive Relationship ◽  
Emerging Market ◽  
Small Sample ◽  
Firm Level ◽  
Content Type ◽  
Future Studies ◽  
The Future ◽  
Future Intention ◽  
Future Intent ◽  
The Relationship

Purpose – The purpose of this paper is to provide evidence that firms that are more committed to internationalization, systematically differ from firms that are less committed to internationalization in their future intention to engage in foreign direct investment (FDI). The authors analyzed data from 42 large Brazilian multinational enterprises (MNEs) and found that results support previous research on the degree of satisfaction with prior internationalization efforts and future intent to internationalize, such that the relationship between the two is positive. Yet contrary to existing literature, the degree to which a firm was committed to internationalization has a negative influence on the positive relationship between satisfaction and intent. Design/methodology/approach – All Brazilian firms that have entered foreign markets via FDI were surveyed to measure the firm’s: intent to internationalize; satisfaction with prior internationalization; and commitment to internationalization. Intent to internationalize is future based while both satisfaction and commitment reflect previous year’s activities. The potential response pool included publically traded companies listed on the Bovespa (São Paulo Stock Exchange) and private limited companies (Ltda.). The authors conducted a hierarchical moderated regression analysis to test the moderating effect of commitment to internationalization on the relationship between international satisfaction and intent to internationalize. Findings – This study adds to the literature by examining how past international satisfaction and commitment affect the future intent to internationalize for large Brazilian MNEs. The results confirm that the degree of past satisfaction regarding a firm’s international business is positively related to the firm’s future intent to internationalize. However, the results diverge from past research in two important ways. First, contrary to the organizational behavior literature, past commitment to internationalization does not have a significant relationship with future intention to internationalize. Second, the results show the relationship between satisfaction and intent is weakened by a high degree of international commitment. Research limitations/implications – A limitation of this study is the small sample size. While it encompasses the vast majority of large MNEs in Brazil, the authors still do not have enough data points to test more hypotheses such as the effects of firm size, number of countries the firm is in, and age of the firm. Future studies should attempt to expand the work done here by examining these effects. Another limitation of this study is that it is based on solely one country; Brazil. Future studies should attempt to replicate these findings in other emerging market countries. Practical implications – These results have three main managerial implications. First, international strategists analyzing the trajectory of a firm’s future intentions to internationalize should focus on how satisfied the firm has been with its past efforts. Second, managers should not assume that just because their firms have a large presence abroad that this will subsequently lead to future plans to internationalize. Finally, for emerging market MNEs in a period of the financial crises, committing more to internationalization may reduce the positive relationship between satisfaction and intention. Originality/value – The purpose of this study is to add to the small but growing work on large MNEs from Brazil in order to better understand their internationalization strategies. While there are literally hundreds of articles investigating the individual-level relationship between satisfaction and the intent to do something, there are a dearth at the firm level (see Wood et al., 2011, as a notable exception). The authors therefore attempt to extend the literature on internationalization by discussing how satisfaction at the firm level affects a firm-level decision.

Impact of outward FDI on home country exports

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Niti Bhasin ◽  
Kanika Kapoor
Keyword(s):  
Large Scale ◽  
Home Country ◽  
Emerging Market ◽  
Scale Production ◽  
Business Managers ◽  
Outward Fdi ◽  
Content Type ◽  
Long Run ◽  
The Impact ◽  
The Relationship

PurposeThe relationship of outward foreign direct investment (OFDI) with home country's exports has significant implications for policymakers as well as business managers of MNEs. Since BRICS nations have emerged as important sources as well as destinations of FDI, this paper aims to study the impact of OFDI from these countries on home country exports by using panel data for BRICS for time period 1993–2015.Design/methodology/approachThe author use panel unit root tests, panel cointegration, VECM and causality tests in the study.FindingsThe results reveal that OFDI has a negative and significant impact on home country exports indicating that outward FDI is a substitute for exports in these countries. It also indicates long-run causality from exports towards OFDI. There is no long-run causality running from OFDI to exports, suggesting that MNEs do not “connect” with home economies' firms through forward and backward linkages in value chain.Practical implicationsFrom the point of view of policymakers, it implies a net outflow of capital as the outflow of foreign investment would not be matched by any incremental export earnings since exports are getting substituted by production abroad. For business managers, it is indicative of a growing foreign market that warrants large scale production and justifies the high cost and risk involved in FDI as a mode of entry compared to exports.Originality/valueTo the best of authors' knowledge, this is the first attempt to deal with the relationship between home country exports and OFDI, for an important group of emerging market economies, i.e. BRICS. The understanding of this relationship allow us to identify whether factors contributing to OFDI from emerging economies are “tied” to their home economies thereby making exports necessary or are rather based on firm specific competencies which are leveraged in different locations to cater to expanding markets.

Corporate social responsibility, green innovation and competitiveness – causality in manufacturing

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Carmen Paola Padilla-Lozano ◽  
Pablo Collazzo
Keyword(s):  
Corporate Social Responsibility ◽  
Supply Chain ◽  
Social Responsibility ◽  
Emerging Market ◽  
Manufacturing Companies ◽  
Green Innovation ◽  
Firm Level ◽  
Content Type ◽  
Corporate Social ◽  
The Relationship

Purpose The purpose of this paper is to explore the interplay of corporate social responsibility (CSR) and green innovation in boosting competitiveness in manufacturing in an emerging market context. This study adds green innovation as mediator in the relationship between CSR and competitiveness. Design/methodology/approach A model with three second-order constructs is developed and tested, in a sample of 325 managers from manufacturing companies in Ecuador, using quantitative and cross-section methods. Findings After obtaining adjusted and validated measurement models, a structural equation model was conducted, where the main hypotheses were confirmed, providing empirical evidence that CSR and green innovation significantly influence manufacturing competitiveness in a developing economy. Research limitations/implications This study considers only manufacturing companies in Ecuador, focusing on CSR practices in a single territorial case study. It arguably contributes to reinforce the business case for CSR, with new evidence on the causal relationships between CSR, green innovation and competitiveness, in the context of emerging market manufacturing industries. Although the literature often points at a positive relationship between CSR and firm-level competitiveness, supporting empirical evidence remains scarce. This model, introducing green innovation as mediator in the relationship between CSR and competitiveness in developing markets, accounts for a novel theoretical approach. Practical implications The findings are consistent with previous research, reporting the positive influence of CSR activities on organizational competitiveness, reducing risks and cost structures, as well as improving the relationship with employees, enhancing talent attraction, retention and productivity. Incorporating formal CSR tools to the model allowed us to highlight the relevance of ‘green’ certifications as a means to provide a competitive edge, along with increased bargaining power in the supply chain, resulting in competitiveness gains. The findings on the role of green innovation suggest a transition from cost-savings to a more strategic leverage on responsible innovation as a source of competitive advantage. Social implications Additionally, this research contributes to shed light on the impact of green processes and product innovations on social and environmental performance, providing evidence of a more efficient use of energy and natural resources, increasing productivity and by extension, profitability. CSR shapes an innovation culture that, through the use of social, environmental and sustainability controllers, can create new business models, products, services or processes that boost both firm-level and supply chain productivity, benefits that eventually spill over to the host community. Originality/value This study aims at bridging the research gap on the interplay of CSR, green innovation and competitiveness in manufacturing in an emerging market context.

Home country underdevelopment and internationalization

2017 ◽  
Vol 27 (3) ◽  
pp. 217-230 ◽  
Author(s):  
Alvaro Cuervo-Cazurra ◽  
Ravi Ramamurti
Keyword(s):  
Emerging Markets ◽  
Comparative Advantage ◽  
Home Country ◽  
Emerging Market ◽  
Content Type ◽  
Emerging Market Multinationals ◽  
Economic Underdevelopment ◽  
Conceptual Paper ◽  
Practical Implications ◽  
At Home

Purpose The purpose of this study is to use the rise of emerging-market multinationals as a vehicle to explore how a firm’s country of origin influences its internationalization. Design/methodology/approach This paper is a conceptual paper. Findings We argue that the home country’s institutional and economic underdevelopment can influence the internationalization of firms in two ways. First, emerging-market firms may leverage innovations made at home to cope with underdeveloped institutions or economic backwardness to gain a competitive advantage abroad, especially in other emerging markets; We call this innovation-based internationalization. Second, they may expand into countries that are more developed or have better institutions to escape weaknesses on these fronts at home; we call this escape-based internationalization. Research limitations/implications Comparative disadvantages influence the internationalization of the firm differently from comparative advantage, as it forces the firm to actively upgrade its firm-specific advantage and internationalize. Practical implications We explain two drivers of internationalization that managers operating in emerging markets can consider when facing disadvantages in their home countries and follow several strategies, namely, trickle-up innovation, self-reliant innovation, improvisation management, self-reliance management, technological escape, marketing escape, institutional escape and discriminatory escape. Originality/value We explain how a firm’s home country’s comparative disadvantage, not just its comparative advantage, can spur firms its internationalization.

Linking CEO relationship-focused leadership and corporate entrepreneurship: a multilevel moderated mediation model

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yueyue Liu ◽  
Meng Xi ◽  
Feifei Li ◽  
Xiulin Geng
Keyword(s):  
Indirect Effect ◽  
Organizational Identification ◽  
Identity Theory ◽  
Environmental Uncertainty ◽  
Corporate Entrepreneurship ◽  
Structural Equations ◽  
Strategic Leadership ◽  
Firm Level ◽  
Content Type ◽  
The Relationship

Purpose Corporate entrepreneurship is an important way for organizations to gain competitive advantages and achieve sustainable development. However, few studies pay attention to the influence of CEO strategic leadership on corporate entrepreneurship. Drawing on social identity theory and uncertainty-identity theory, this study aims to investigate whether CEO relationship-focused leadership impacts corporate entrepreneurship through middle managers’ (MMs’) organizational identification and whether the indirect effect is moderated by environmental uncertainty. Design/methodology/approach Using 192 Chinese samples with 192 firm-level and 716 department-level observations, this study uses multilevel structural equations modeling by Mplus 8.0 to test the theoretical model. Findings This study finds that CEO relationship-focused leadership positively predicts MMs’ organizational identification and corporate entrepreneurship, and MMs’ organizational identification mediates the relationship between CEO relationship-focused leadership and corporate entrepreneurship. In addition, environmental uncertainty moderates not only the relationship between CEO relationship-focused leadership and MMs’ organizational identification but also the indirect effect of CEO relationship-focused leadership on corporate entrepreneurship through MMs’ organizational identification. Research limitations/implications This study enriches the understanding of process and contextualization of CEO strategic leadership influencing on corporate entrepreneurship. Originality/value To the best of the authors’ knowledge, this study is among the first to explore the influence of CEO relationship-focused leadership on corporate entrepreneurship.

Does investment in innovation impact firm performance in emerging economies? An empirical investigation of the Indian food and agricultural manufacturing industry

2021 ◽  
Vol 13 (2) ◽  
pp. 233-248
Author(s):  
Manogna R.L. ◽  
Aswini Kumar Mishra
Keyword(s):  
Firm Performance ◽  
Manufacturing Industry ◽  
Emerging Market ◽  
Developed Countries ◽  
Emerging Economy ◽  
Content Type ◽  
Agricultural Industry ◽  
Indian Food ◽  
The Impact ◽  
The Relationship

Purpose The study aims to analyze the impact of Research & Development (R&D) intensity on the firm’s performance, measured by growth of sales in the emerging market like India. Innovation strategy and its outcomes for firms may be different in developing countries as compared to developed countries. Thus, a study that focuses on the emerging economy like India, with a majority of the population dependent on agriculture, is of prime importance to the firm performance in the food and agricultural manufacturing industry. For this study, the broader focus will be on one widely recognised factor which may influence the growth rate of firms, i.e. investment in innovations which is in terms of R&D expenditure. Design/methodology/approach The paper investigates the relationship between the R&D efforts and growth of firms in the Indian food and agricultural manufacturing industry during 2001–2019. To empirically test the relationship between firm’s growth (FG) and R&D investments, system generalised method of moments technique has been used, hence enabling to avoid problems related to endogeneity and simultaneity. Findings The findings reveal that investments in innovations have a positive effect on the growth of firms in the Indian food and agricultural manufacturing industry. Investment in R&D also enables the firms to reap benefits from externalities present in the industry. Further analysis reveals that younger firms grow faster when they invest in R&D. More specifically, this paper finds evidence in the case of the food and agricultural industry that import of raw materials negatively affects the FG and export intensity positively affects the growth in the case of R&D firms. Research limitations/implications This study suggests that the government should encourage the industries to invest optimally in R&D projects by providing favourable fiscal treatments and R&D subsidies which are observed to have positive effects in various developed countries. Originality/value To the best of the author’s knowledge, the current paper is the first to analyse the impact of innovation in food and agricultural industry on firm’s performance in an emerging economy context with the latest data. This paper agrees that a government initiative to increase private R&D expenditure would have favourable effects on FG as growing investments in R&D lead to further growth of the firms.

External technology acquisition, exploitation and process innovation performance in emerging market small and medium sized enterprises: the moderating role of organizational slack

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Thammanoon Charmjuree ◽  
Yuosre F. Badir ◽  
Umar Safdar
Keyword(s):  
Open Innovation ◽  
Emerging Market ◽  
Process Innovation ◽  
Innovation Performance ◽  
Mediating Effect ◽  
Content Type ◽  
Technology Acquisition ◽  
The Relationship ◽  
Unabsorbed Slack ◽  
Positive Effect

PurposeThis study is among the very few to examine the firm's simultaneous use of both dimensions of open innovation and its influences on the firm's process innovation performance (PIP). Specifically, the authors consider the relationship between firm's external technology acquisition (ETA) and external technology exploitation (ETE) and examine their direct, indirect and mediating effect on the firm's PIP. The authors also examine the moderating effect of the organizations' unabsorbed slack (UASL) on the relationship between ETA and ETE.Design/methodology/approachAnalyzing data collected from 311 small- and medium-sized software development firms in emerging market; Thailand, we show that both ETA and ETE have a positive effect on PIP and that ETE fully mediates the relationship between ETA and PIP.FindingsThe authors show that both ETA and ETE have a positive effect on PIP and that ETE fully mediates the relationship between ETA and PIP. Moreover, the relationship between ETA and ETE is positively moderated by the firms' unabsorbed slack (UASL) and that the influence of ETA on PIP through ETE is stronger under higher unabsorbed slack.Originality/valueThe authors extend the “traditional” performance outcome of outbound dimension of open innovation concept, which focuses exclusively on commercialization and market (Chesbrough, 2003b), by showing that ETE positively influences the firm's PIP. Moreover, the study explains the mechanism through which ETA influence the firm's PIP by proposing that ETE fully mediates the relationship between ETA and PIP.

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