The effect of comparative advantage of host country’s industry on multinationals’ M&A vs greenfield FDI decisions

2016 ◽  
Vol 20 (3) ◽  
pp. 229-258 ◽  
Author(s):  
Jaeho Lee ◽  
Yong Joon Jang
Keyword(s):  
Comparative Advantage ◽  
Investment Decision ◽  
Heterogeneous Firms ◽  
Entry Mode ◽  
Foreign Market ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Trade Model ◽  
Comparative Advantages

Purpose The purpose of this paper is to argue that comparative advantage of host country’s industry can be one of the significant determinants of the decision on mergers and acquisitions (M&A) or greenfield in foreign direct investment (FDI). Design/methodology/approach The authors extract five-related properties of an industry with comparative advantage in a host nation from Bernard et al.’s (2007) international trade model with heterogeneous firms and attempt to empirically test their roles in a multinational enterprise’s (MNE) M&A or greenfield investment decision, using the inward FDI data set in Korea from 1999 to 2006. Findings The theoretical framework finds that the five properties derived from an industry with comparative advantage in a host country have mixed motives for M&A or greenfield. The empirical results show that selected conventional independent variables generally affect the M&A or greenfield entry mode decision with significance individually and that their impacts become more or less prominent when the authors employ interaction terms combining them with comparative advantages in the industries. Research limitations/implications This implies that MNEs not only consider their own firm-specific advantages or other country-level factors for foreign market entries as the previous research generally found, but also seriously take into account industry-specific factors, especially industry-wide comparative advantages based on heterogeneous productivities of firms. Originality/value This paper reconciles multinationals’ strategic motives under an oligopolistic market with their efficiency gains under a monopolistic competitive market, which are considered as two main factors for cross-border M&A. Furthermore, this paper adds a new firm-level data set into entry mode research.

scholarly journals International Trade and Human Capital Investment with Heterogeneous Firms and Workers: Modeling and Analysis

Mathematics ◽  
2021 ◽  
Vol 9 (10) ◽  
pp. 1106
Author(s):  
Jaewon Jung
Keyword(s):  
Human Capital ◽  
International Trade ◽  
Organizational Behavior ◽  
Capital Accumulation ◽  
Global Economy ◽  
Capital Investment ◽  
Investment Decision ◽  
Heterogeneous Firms ◽  
Modeling And Analysis ◽  
Trade Model

Though the importance of organizational behavior and human decision processes within firms for the firm performance has largely been recognized in the business and management literature, much less attention has been devoted to studying such implications in the international trade context. This paper develops a general-equilibrium trade model in which heterogeneous workers make an investment decision in acquiring advanced managerial skills and choose their optimal effort level based on their comparative advantage. In doing so, we show how globalization-induced human capital accumulation within firms leads to sustainable economic growth. We also show that workers’ organizational belief and CEO’s managerial vision may be an important element for the human capital formation within firms and for the performance of firms in a global economy.

Does board gender diversity affect the transparency of corporate political disclosure?

2018 ◽  
Vol 26 (4) ◽  
pp. 444-463 ◽  
Author(s):  
D.G. DeBoskey ◽  
Yan Luo ◽  
Jeff Wang
Keyword(s):  
Corporate Governance ◽  
Voluntary Disclosure ◽  
Gender Diversity ◽  
Political Activity ◽  
Political Contributions ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Ethics Research ◽  
Board Gender Diversity

Purpose The purpose of this paper is to examine the influence of board gender diversity on the transparency of corporate political disclosure (CPD). Design/methodology/approach Two empirical proxies, CPD transparency and policy transparency, are constructed from a data set jointly produced by the Center of Political Activity and the Carol and Lawrence Zicklin Center for Business Ethics Research. The CPD transparency score measures the level of transparency in voluntary corporate disclosure of the amount of political contributions and the identity of the recipients as well as the titles and names of the executives who authorize the political spending. The policy transparency score measures the level of transparency in the voluntary disclosure of the policies governing corporate political spending. Board gender diversity is measured by the percentage of women on the board of directors. Findings Higher proportions of female directors are associated with more transparent disclosure of political contributions after controlling for a set of corporate governance and firm-level variables. Originality/value This study is the first to examine whether and how gender-diversified boards enhance the transparency of CPD. It contributes to the literature by providing evidence that gender-diversified boards enhance corporate governance.

scholarly journals International new ventures market expansion through collaborative entry modes

2018 ◽  
Vol 35 (6) ◽  
pp. 890-913 ◽  
Author(s):  
Pushyarag N. Puthusserry ◽  
Zaheer Khan ◽  
Peter Rodgers
Keyword(s):  
Small And Medium Enterprises ◽  
New Ventures ◽  
Entry Mode ◽  
Foreign Market ◽  
International New Ventures ◽  
Structured Interviews ◽  
Entry Modes ◽  
Content Type ◽  
Market Expansion ◽  
The Uk

PurposeThe purpose of this paper is to examine the role that different collaborative entry modes play in how international new ventures (INVs) expand into international markets.Design/methodology/approachThe paper’s arguments are based on the INVs and social network literatures. In order to investigate the entry modes adopted by British and Indian small and medium information and communication technology (ICT) firms into each other’s markets, the paper outlines the results of qualitative semi-structured interviews with the key decision makers of ten British and ten Indian ICT firms.FindingsThe findings contribute to the relatively under-researched area of how INVs enter foreign markets through collaborative entry mode. The findings suggest that INVs utilize both equity and non-equity modes of collaboration to expand their international operations. The findings also indicate that financial and non-financial resources always limit the market expansion and internationalization of such companies. Against this background, the INVs rely on building collaboration as one of the safest methods for foreign market expansion and successful internationalization. The collaborative entry mode is enhanced by entrepreneurs’ prior experience, social ties and knowledge of the foreign market.Research limitations/implicationsSet against the backdrop of an ever-increasing trend of internationalization of small and medium enterprises (SMEs), the paper offers important implications for understanding the conditions and factors behind the choice of collaborative and non-collaborative entry modes by INVs in particular and SMEs more broadly.Originality/valueThe paper is one of the few studies that have examined the role of collaborative entry modes choice adopted by INVs from two of the largest economies – the UK and India.

Exploring innovation creation across rural and urban firms

2018 ◽  
Vol 7 (4) ◽  
pp. 357-376 ◽  
Author(s):  
Giri Aryal ◽  
John Mann ◽  
Scott Loveridge ◽  
Satish Joshi
Keyword(s):  
National Survey ◽  
Negative Binomial ◽  
Secondary Data ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Rural And Urban ◽  
Wide Range ◽  
Rural Firms ◽  
Urban Firms

Purpose The innovation creation literature primarily focuses on urban firms/regions or relies heavily on these data; less studied are rural firms and areas in this regard. The purpose of this paper is to employ a new firm-level data set, national in scale, and analyze characteristics that potentially influence innovation creation across rural and urban firms. Design/methodology/approach The authors use the 2014 National Survey of Business Competitiveness (NSBC) covering multiple firm-level variables related to innovation creation combined with secondary data reflecting the regional business and innovative environments where these firms operate. The number of patent applications filed by these firms measures their innovation creation, and the paper employs a negative binomial regression estimation for analysis. Findings After controlling for industry, county and state factors, rural and urban firms differ in their innovation creation characteristics and behaviors, suggesting that urban firms capitalize on their resources better than rural firms. Other major findings of the paper provide evidence that: first, for rural firms, the influence of university R&D is relevant to innovation creation, but their perception of university-provided information is not significant; and second, rural firms that are willing to try, but fail, in terms of innovation creation have a slight advantage over other rural firms less willing to take on the risk. Originality/value This paper is one of the first to analyze the 2014 NSBC, a firm-level national survey covering a wide range of innovation-related variables. The authors combine it with other regional secondary data, and use appropriate analytical modeling to provide empirical evidence of influencing factors on innovation creation across rural and urban firms.

The effect of industry association on firm innovation in Chinese private ventures

2019 ◽  
Vol 57 (9) ◽  
pp. 2414-2435
Author(s):  
Wenge Zhang ◽  
Jun Li ◽  
Yiyuan Mai
Keyword(s):  
Moderating Effects ◽  
Firm Level ◽  
Firm Innovation ◽  
Data Set ◽  
Industry Association ◽  
Content Type ◽  
Emerging Industries ◽  
Practical Implications ◽  
Firm Learning

Purpose The purpose of this paper is to examine the relationship between industry association membership and firm innovation in Chinese private ventures. A secondary objective is to investigate potential moderating effects of firm learning practices and founder characteristics on the above relationship, and to draw out implications for policymakers and practitioners. Design/methodology/approach The paper utilizes data from a sample of 567 Chinese entrepreneurial firms operating in 9 designated emerging industries. Hierarchical regression models were employed to analyze the effect of industry association membership on firm innovation, and the potential moderating effects. A 2SLS procedure was adopted to control for potential endogeneity issue. Supplemental analyses were conducted to ensure the robustness of the findings. Findings The paper provides empirical insights about how industry association membership, along with firm learning practice and founder leadership, affect firm innovation in Chinese private ventures in emerging industries. It suggests that industry association membership positively affects firm innovation. Further, there is a three-way interaction effect of industry association membership, learning practice and founder power on innovation. Research limitations/implications Due to the design of the data set, there are some limitations. First, the study only considered whether a firm belongs to an industry association, but not the nature of such membership (length, firm status in the association, etc.). Second, the cross-sectional design may limit the power of the study to make casual implications about the tested relationships. Practical implications The paper provides important practical implications for policymakers and entrepreneurs in China. In general, the results suggest that private ventures pursuing innovation in emerging industries can benefit from industry associations, and entrepreneurs shall actively engage in firm-level and personal-level learning. For policymakers, the study suggests that to foster innovation in an emerging industry, special attention shall be paid to building necessary institutional support to develop and to strengthen the role of industry association in the industry. Originality/value This paper fulfills an important gap in the literature in that it is one of the first, which investigates the role of the industry association in firm innovation, especially in a non-western context. This paper provides new insights into the role of industry association and firm innovation in an under-researched developing economy context.

Revisiting the impact of organized labor on corporate bottom lines

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dmytro Osiichuk ◽  
Paweł Mielcarz ◽  
Julia Kavalenka
Keyword(s):  
Financial Performance ◽  
Organized Labor ◽  
Corporate Financial Performance ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
International Panel ◽  
Transmission Mechanisms ◽  
Credible Threat ◽  
The Impact

Purpose Relying on an international panel data set, the purpose of this paper is to quantify the economic impact of labor unionization on corporate financial performance. Design/methodology/approach Static panel regression analysis is performed for a firm-level multinational data set to elucidate the postulated empirical relationships between employee unionization and corporate performance. The transmission mechanisms intermediating the studied effects are discussed and operationalized. Findings The empirical evidence demonstrates that firms with a higher level of employee unionization spend more on wages and labor-related expenses. The concomitant downside of higher resource extraction by unions is a lower rate of net employment creation and a higher possibility of redundancy layoffs. Originality/value Overall, the authors demonstrate that by creating a credible threat of employee disobedience manifested through strikes and internal wage disputes, labor unions remain an effective mechanism of increasing employees’ bargaining power. Despite the discovered weak negative associative link between the degree of unionization and corporate financial performance, the authors perceive the overall evidence to be inconclusive on this matter.

scholarly journals The duration of global agri-food export competitiveness

2017 ◽  
Vol 119 (6) ◽  
pp. 1378-1393 ◽  
Author(s):  
Štefan Bojnec ◽  
Imre Fertő
Keyword(s):  
Comparative Advantage ◽  
Agricultural Land ◽  
Survival Rates ◽  
Revealed Comparative Advantage ◽  
Data Set ◽  
Term Survival ◽  
Content Type ◽  
Country Level ◽  
Export Competitiveness

Purpose The purpose of this paper is to examine the pattern, duration and country-level determinants of global agri-food export competitiveness of 23 major global agri-food trading countries. Design/methodology/approach A large panel data set is compiled to facilitate assessment of the pattern, duration and country-level determinants of global agri-food export competitiveness using a revealed comparative advantage index. Findings The results suggest that the duration of revealed comparative advantage is heterogeneous at the agri-food product level. Long-term survival rates as revealed by the comparative advantage indices are among the highest for the Netherlands, France, Belgium, the USA, Argentina and New Zealand. The level of economic development, the share of agricultural employment, subsidies to agriculture and differentiated consumer agri-food products increase the likelihood of failure in the duration of comparative advantage, while the abundance of agricultural land and export diversification reduce that likelihood. Originality/value The framework is conceptually innovative in how it models the likelihood of failure in the duration of comparative advantage and assesses implications. Export competitiveness is a crucial factor in long-term global farm business survival as it fosters opportunities for business prosperity on global markets.

Firm-level determinants of job creation by SMEs: Swedish empirical evidence

2015 ◽  
Vol 22 (4) ◽  
pp. 666-679 ◽  
Author(s):  
Darush Yazdanfar ◽  
Peter Öhman
Keyword(s):  
Method Of Moments ◽  
General Pattern ◽  
Generalized Method Of Moments ◽  
Job Creation ◽  
Financial Leverage ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Industry Sectors ◽  
The Relationship

Purpose – Using a resource-based approach, the purpose of this paper is to examine the effects of the firm-level determinants financial leverage and liquidity on job creation at small and medium-sized enterprises (SMEs) in six industry sectors in Sweden. Design/methodology/approach – The generalized method of moments system model was used to analyse an extensive panel data set of 26,721 Swedish SMEs over the 2008-2011 period. Findings – The empirical results indicate that job creation is positively related to SMEs’ financial leverage and liquidity, and to their size and age. SMEs’ financial leverage and size are the most important firm-level determinants of job creation. Although there are differences between industry sectors, the results confirm the general pattern of the effect of financial leverage and liquidity on job creation. Research limitations/implications – Due to the importance of job creation for economic growth, the relationship between SMEs’ capital structure and job creation should be of interest to researchers, practitioners, and policymakers. In investigating the importance of financial leverage and liquidity to labour demand dynamics, this study analyses the firm-level factors that influence job creation by SMEs. Originality/value – Since there is limited empirical research focusing on this relationship at firm level in the context of SME, the current research aims at investigating the determinants of job creation at the firm level empirically.

Firm-level agreements, employment strategies and temporary workers

2020 ◽  
Vol 42 (1) ◽  
pp. 194-212
Author(s):  
Saverio Minardi
Keyword(s):  
Fixed Effects ◽  
Selection Process ◽  
Temporary Employment ◽  
Least Square ◽  
Temporary Workers ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Collective Agreements ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of two-tier firm-level collective agreements on firms’ propensity to use temporary employment, accounting for the process of self-selection of firms into different bargaining levels in the Italian context. It further examines which firm-level characteristics drive this process of selection. Design/methodology/approach The empirical analysis uses a panel data set of Italian firms for the years 2005, 2007, 2010 and 2015. Estimations are produced and compared through ordinary least square regression, random-effects and fixed-effects models. Findings Results show that enterprises adopting two-tier firm-level agreements (TTFA) are associated with lower levels of temporary workers. However, a longitudinal analysis suggests that introducing a TTFA does not impact firms’ propensity to employ temporary workers. This novel finding highlights the presence of a selection process based on firm-level time-constant characteristics. The paper argues that these characteristics refer to management orientation toward high-road rather than low-road employment strategies. Further evidence is brought in support of this claim, showing that firms’ propensity toward the provision of training for their labor force partially explain the process of selection. Originality/value The study is the first to analyze the impact of secondary-level collective agreements on firms’ reliance on temporary employment, offering new evidence on the causes of the expansion of temporary employment. It further highlights the relevance of employers’ strategies in shaping the impact of the bargaining structure.

Corporate tax planning and corporate tax disclosure

2019 ◽  
Vol 28 (2) ◽  
pp. 327-364
Author(s):  
Mahfoudh Hussein Mgammal
Keyword(s):  
Positive Impact ◽  
Positive Influence ◽  
Tax Planning ◽  
Corporate Tax ◽  
Effective Tax Rate ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
The Impact ◽  
Practical Implications

Purpose This paper aims to examine the impact of corporate tax planning (TP) on tax disclosure (TD). Using tax expenses data set, with the detailed effective tax rate (ETR) by reconciling individual items of income and expenses. Design/methodology/approach A firm-level panel data set is used to analyse 286 non-financial listed companies on Bursa Malaysia that spans the period 2010-2012. Multivariate statistical analyses were run on the sample data. The empirical understanding of TD depends on public sources of data in the financial statement, characterized in the aggregated note of tax expenses. Fitting with Malaysian environment, the authors measured TD using modified ETR reconciling items. Findings Results show that TP, exhibit a robust positive influence on TD. This suggests that TP is related to lower corporate TD. In addition, companies with high TP attempt to mitigate the disclosure problem by increasing various TD. The authors further find significant positive impact between each of firm size and industry dummy, on TD. This means that company-specific characteristics are significant factors affecting corporate TD. Research limitations/implications This study contributes to the literature on the effect of TP on TD. It depends on both the signalling theory and the Scholes–Wolfson framework, which are the main theories concerned with TP and TD. Therefore, from a theoretical side, the authors add to the current theories by verifying that users are the party influenced whether positively or negatively, by the extent of TD or the extent of TP activities through Malaysian organizations. Practical implications The evidence found in this paper has important policy and practical implications for the authorities, researchers, decision makers and company managers. The findings can provide them some relevant insights on the importance of TP actions from companies’ perspective and contribute to the discussion of who verifies and deduces from TD directed by companies. Originality/value This paper originality is regarded as the first attempt to examine the impact of TP on TD in a developing country such as Malaysia. Malaysian setting is an interesting one to examine because Malaysia could be similar to other countries in Southeast Asia. Results contribute significant insights to the discussion about TD regarding, which parties are responsible for the verification of TD by firms, and which parties benefit from this disclosure. Findings suggest that companies face a trade-off between tax benefits and TD when selecting the type of their TP.

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