Dynamic integration paths of emerging multinational enterprises in advanced markets

2019 ◽  
Vol 30 (1) ◽  
pp. 1-23 ◽  
Author(s):  
Yanan Yang ◽  
Christoph Lütge
Keyword(s):  
Multinational Enterprises ◽  
Dynamic Capabilities ◽  
Data Set ◽  
German Market ◽  
Content Type ◽  
Multi Stage ◽  
Linear Integration ◽  
Dynamic Perspective ◽  
Post Merger Integration ◽  
Integration Strategies

Purpose This paper aims to examine dynamic multi-stage post-merger integration (PMI) evolutions by Chinese multinational enterprises (CMNEs) in the German market and their potential influencing factors. Design/methodology/approach A data set was collected from 25 interviews with 21 respondents from six Chinese acquisition cases in Germany, and a comparative multi-case study and content analysis were applied. Findings The results reveal that Chinese acquirers take segmented linear integration path in Germany from nearly no integration to organisational integration and then to production integration. It contains three sub-paths: the P-O-O path (partnering–organisational optimisation–production optimisation), the P-P-P path (preservation–organisational preservation–production preservation) and the P-C-C path (preservation–organisational centralisation–production confusion). The initial nearly no integration condition is mainly impacted by asymmetric information and the targets’ strategic positions, whereas different organisational and production integration degrees in mid- and long-term stages are primarily influenced by Chinese acquirers' different dynamic capabilities. Moreover, Chinese acquirers' corporate ownership is not found to be a significant factor that influences CMNEs to take different integration strategies in different PMI stages. Research limitations/implications This paper contributes to broaden emerging multinational enterprises’ (EMNEs) PMI theory by adding dynamic perspective and provides suggestions for mergers and acquisitions (M&As) practitioners to identify integration options and avoid integration pitfalls in different integration stages. Originality/value Existing works identified that EMNEs prefer to partner with the targets in advanced markets, but lacked a dynamic perspective to disclose whether the partnering strategy would be adjusted or not over time. This study is the first to explore multi-stage integration changes and is one of the few studies that recognise the interaction of the integration strategy with the dynamic capability of the acquiring enterprises.

Organisational culture affecting post-merger integration

2019 ◽  
Vol 29 (2) ◽  
pp. 139-154 ◽  
Author(s):  
Yanan Yang ◽  
Christoph Lütge ◽  
Hongwei Yang
Keyword(s):  
Quantitative Research ◽  
Multinational Enterprises ◽  
Cultural Dimensions ◽  
Data Set ◽  
German Market ◽  
Content Type ◽  
Post Merger Integration ◽  
Merger Integration ◽  
Integration Levels ◽  
Levels Of Integration

Purpose The purpose of this paper is to determine the principal organisational cultural dimensions that affect levels of post-merger integration (PMI) in Chinese acquisitions in Germany and to explore the relationship of these specific organisational cultural dimensions and levels of integration. Design/methodology/approach Data set were collected using a structured questionnaire given to Chinese and German managers and employees, who implemented/were responsible for the PMI in 12 Chinese acquisitions in Germany. A total of 120 questionnaires were distributed and there were 67 respondents, corresponding to a response rate of about 56 per cent. Principal components analysis, one-way ANOVA and bi-variate Spearman’s correlation were applied to analyse the data. Findings Findings revealed that five organisational cultural dimensions (i.e. adaptability, consistency, involvement, balance and flexibility) were extracted to be the primary indicators affecting levels of integration in Chinese reverse mergers and acquisitions (M&As) in the German market. Further, adaptability emerged as the only predictor with a significant negative implication on predicting the degree of PMI that Chinese investors would initiate to integrate their acquired German subsidiaries. Originality/value This study is one of the few studies to consider the specific organisational cultural dimensions affecting the integration levels of reverse M&As and is the first study, to the best of our knowledge, to explore the correlations of specific corporate cultural dimensions and integration levels in emerging multinational enterprises’ reverse M&As through quantitative research.

Building (or not building) dynamic capabilities: the case of Italian subsidiaries in China and India

2018 ◽  
Vol 26 (4) ◽  
pp. 337-360 ◽  
Author(s):  
Giuseppe Tattara
Keyword(s):  
Value Chain ◽  
Multinational Enterprises ◽  
Dynamic Capabilities ◽  
Case Study Research ◽  
Business Strategies ◽  
Future Research ◽  
Capability Development ◽  
Regional Effect ◽  
Content Type ◽  
Capability Building

Purpose The purpose of this paper is to examine the process of capability building at subsidiary level and the forces preventing such process. The paper discusses and tests three propositions governing this process. Design/methodology/approach This research is based on multiple case studies. A case study research is most useful when addressing issues about which little prior theory has been developed or empirical evidence collected. Findings Subsidiaries in Asia operate in a way substantially different from those in the West. Specifically what ways do market specificities in Asian economies serve to either inhibit or positively encourage the development of a subsidiary? What are the circumstances which could induce subsidiaries to outsource production? Research limitations/implications Future research should explore the regional effect on MNE subsidiary types and different flexibilities exhibited in the value chain. What are the specific aspects (macro and micro) that explain variations of business strategies at subsidiary levelboth over time and between countries? Practical implications Multinational enterprises (MNEs) should be aware of the strong potential for capability development at the subsidiary level. This increased awareness ought to induce consideration in MNEs about how best to encourage such know capability development and how to leverage these capabilities for a better MNE performance. Social implications Managers who knew the host country languages and culture, and have outward-looking attitudes, are in advantageous positions to learn about new opportunities. Originality/value The paper offers empirical insights into the state and drivers of subsidiary performance in Asia. Specifically it shows how neglect of external conditions can act to open people’s eyes and foster a capability-building process within subsidiaries.

R&D volatility and market value: the role of executive overconfidence

2019 ◽  
Vol 14 (2) ◽  
pp. 411-431
Author(s):  
Benlu Hai ◽  
Qingzhu Gao ◽  
Ximing Yin ◽  
Jin Chen
Keyword(s):  
Business Performance ◽  
Positive Impact ◽  
Market Value ◽  
Data Set ◽  
Content Type ◽  
Dynamic Perspective ◽  
Innovation Strategies ◽  
The Impact ◽  
The Relationship

Purpose Significant increase or decrease in research and development (R&D) expenditure may have an immense impact on market value. Based on the punctuated equilibrium theory, this paper aims to empirically analyze the impact of R&D volatilities on market value and the moderating effect of executive overconfidence. Design/methodology/approach The study uses the panel data set that covers 902 Shanghai and Shenzhen A-share manufacturing listed firms and multiple regression method to test the theoretical hypotheses. Findings The results show that both positive and negative R&D volatilities have a robust and significant positive impact on the market value. Further analysis shows that the executive overconfidence positively moderates the relationship between R&D volatilities and market value. Research limitations/implications In a rapidly changing and highly competitive environment, firms should recognize that the balance of innovation strategies will help to bring higher market value. Furthermore, firms could improve corporate governance to make the best of managerial characteristics, such as overconfidence, on the innovation decision-making process. Originality/value By pushing the static perspective to a dynamic perspective and empirically documenting the role of executive overconfidence, this study contributes to the literature on the relationship between R&D expenditure and market value, generating theoretical and practical insights for firms to improve innovation governance and innovation strategies to achieve better business performance.

scholarly journals Workforce education diversity, work organization and innovation propensity

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Alejandro Bello-Pintado ◽  
Carlos Bianchi
Keyword(s):  
Dynamic Capabilities ◽  
Context Effects ◽  
Evolutionary Economics ◽  
Work Organization ◽  
Capabilities Approach ◽  
Organizational Practices ◽  
Data Set ◽  
Content Type ◽  
Moderating Role

PurposeDiversity of people, knowledge and resources has been identified as a determinant of firms' growth. This paper focusses on innovation propensity as a critical dimension of firm's growth path, aiming to analyse the effects of the firm's horizontal educational diversity (HED) on the propensity to conduct different technological innovation activities (TIAs). In addition, considering the evidence showing that these effects are neither direct nor linear, the authors analyse the moderating role of the firm's organizational practices oriented to knowledge sharing (KS) on the association between HED and the adoption of TIAs.Design/methodology/approachFollowing the theoretical arguments of the resource-based view (RBV), the evolutionary economics and the dynamic capabilities approach and related empirical evidences, the authors proposed four hypotheses regarding the effect of HED on TIAs and the moderating role of work organization practices oriented to promote KS. Empirically, the authors calculated different HED diversity indexes capturing two basic dimensions: variety and balance. Hence, using instrumental variables and panel data techniques to control endogeneity biases, the authors tested the proposed hypotheses using a data set of Uruguayan manufacturing firms between 2004 and 2015.FindingsIn line with previous evidence, results showed idiosyncratic context effects. The authors found a robust, linear, positive and significant relationship between HED and TIAs, but the effect can only be consistently associated with the adoption of internal or external research and development (R&D) activities. Moreover, the moderating role of work organization practices oriented to promote KS is positive and significant when firms engage in TIAs. For technological innovations that only involve the acquisiton of technology (AT), a positive effect is also observed but always associated to organizational practices oriented to promote KS.Originality/valueThis paper revisits the analysis of workforce diversity for a relatively less explored context. This research contributes to the field by linking HED and work organization practices to understand firm's innovation propensity in a developing context. Moreover, while other studies have focussed only on top management or R&D team diversity, the authors have analysed the whole professional's workforce. It allows the authors to discuss the effects of diversity on innovation propensity in the light of the ongoing debate on the effects of innovation in employment.

An analysis of Japan’s connectivity to the global innovation system

2016 ◽  
Vol 24 (4) ◽  
pp. 399-423 ◽  
Author(s):  
Ahreum Lee ◽  
Ram Mudambi ◽  
Marcelo Cano-Kollmann
Keyword(s):  
Tacit Knowledge ◽  
Multinational Enterprises ◽  
Innovation System ◽  
Innovation Systems ◽  
Data Set ◽  
Content Type ◽  
Innovation Activities ◽  
Global Innovation ◽  
Knowledge Intensive ◽  
Short Product

Purpose In the modern knowledge-intensive economy, a nation’s competitiveness depends on the ability of its constituent firms to innovate. Extant research in national systems of innovation highlights institutions and public policies toward innovation as key determinants that affect firms’ innovation activities. This paper aims to widen the investigation by arguing that co-inventor connectivity allows firms to access the most tacit knowledge within global innovation systems. Therefore, it is one of the key factors that underpin a nation’s ability to develop and sustain its competitiveness. Design/methodology/approach Using a data set of 406,168 patents from US Patent and Trademark Office during the period of 1975-2004, this study analyzed the Japanese system of innovation through co-inventor networks. Findings Surprisingly, the authors found that compared to other advanced countries such as Germany and Denmark, the Japanese innovation system is quite closed. Originality/value The dimension of tacit knowledge is crucial in the current environment of rapid cycle time, short product lifespans and increasing emphasis on exploratory innovation. Hence the authors speculate that closedness to global innovation systems could be one of the reasons why many of Japan’s traditionally powerful multinational enterprises exhibit weak performance in recent years.

Managing change after the merger: the value of pre-merger ingroup identities

2014 ◽  
Vol 27 (3) ◽  
pp. 430-448 ◽  
Author(s):  
Jay Joseph
Keyword(s):  
Social Identity Theory ◽  
Intergroup Relations ◽  
Contextual Factors ◽  
Structured Interviews ◽  
Content Type ◽  
Managing Change ◽  
Integration Strategy ◽  
Post Merger Integration ◽  
Integration Strategies

Purpose – The purpose of this paper is to examine the role that pre-merger identification plays within a post-merger setting. Social Identity Theory (SIT) has conflicting reports on the role that pre-merger identification plays in post-merger integration. The current research explores a case study where enhancing pre-merger identification resulted in positive post-merger identification and intergroup relations; progressing knowledge in the field by analysing the contextual factors that facilitate this outcome. Design/methodology/approach – The research follows a case study design applying integration method for the study of changes over time. Two sets of in-depth semi-structured interviews underwent content analysis to derive thematic findings. Case detail was also provided to frame the results. Findings – Findings of the research showed that the integration strategy used to facilitate pre-merger ingroup identification reduced the perceived status differences between groups, moderately improved ingroup relations, and significantly improved intergroup relations. Practical implications – For strategic planners involved in managing change during a merger, the findings provide an alternative integration strategy to be used within a joint-brand structure. The research also provides several analysis points that managers can use to design appropriate integration strategies. Originality/value – The findings are important for the application of SIT to mergers and acquisitions, which commonly view pre-merger identification as a barrier to integration. The current study outlines the contextual factors which strengthen the relationship between pre-merger identity and post-merger identification.

Post-entry growth in scope and scale among Chinese multinational enterprises: a structural embeddedness explanation

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Xuanya Shi ◽  
Francis Boadu ◽  
Yifei Du
Keyword(s):  
Indirect Effect ◽  
Multinational Enterprises ◽  
Service Industries ◽  
Mediating Effect ◽  
Mediation Effect ◽  
Equation Modeling ◽  
Data Set ◽  
Content Type ◽  
Structural Embeddedness ◽  
Chinese Multinational Enterprises

PurposeBoth the scope of postentry growth and the scale of postentry growth are essential for Chinese multinational enterprises' aggressive internationalization. Yet, prior literature has not considered the synergistic approach of postentry growth that seeks the scope of growth and the scale of growth simultaneously. Building upon the embeddedness perspective and the learning view, we address how structural embeddedness directly affects firms' postentry growth in the form of scope and scale and indirectly affects postentry growth via both the scope of growth and the scale of growth. Particularly, we investigate the decreasing mediating effect of the growth's scale on the growth's scope when embeddedness strengthens.Design/methodology/approachWith a survey data set of 206 Chinese multinational firms from manufacturing and service industries, we conduct structural equation modeling (SEM), partial least squares path modeling (PLS-PM), instantaneous indirect effect assessment and hierarchical linear regression model to test our hypotheses.FindingsFirst, Chinese multinational enterprises’ (CMNEs) structural embeddedness is positively related to their scope of postentry growth, while has a U-shaped relationship with their scale of postentry growth. Second, CMNEs' scope of postentry growth mediates the relationship between structural embeddedness and the scale of postentry growth, the mediation effect counts for 33.5% of the over effect. Finally, the indirect effect of structural embeddedness on the scope of postentry growth through the scale of postentry growth is nonlinear. As the structural embeddedness strengthens, the positive indirect effect gradually weakens.Originality/valueWe believe this study further connects core international business research on postentry growth to the fast-growing literature on emerging markets multinational enterprises' internationalization. In addition, we undertake an initial effort in addressing an important gap in the literature: how structural embeddedness matters to firms' postentry growth. Moreover, this study finds important evidence to support the direct and indirect effect of structural embeddedness on postentry growth.

Toward a dynamic capabilities’ diffusion model for international business headway of SMEs: evidence from the metallurgic and metal-mechanic (MMI) sectors

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Bruno Fernandes Abrantes ◽  
Miguel Torres Preto ◽  
Nelson António
Keyword(s):  
Multinational Enterprises ◽  
Dynamic Capabilities ◽  
Small And Medium Enterprises ◽  
Organizational Capabilities ◽  
Content Type ◽  
Global Dynamic ◽  
Manifest Content ◽  
Multiple Case ◽  
Medium Enterprises ◽  
Current Paradigm

Purpose This paper aims to explore the characteristics of capability exchange within internationalizing small and medium enterprises (SMEs) of the Portuguese metallurgic and metal-mechanic sectors. Design/methodology/approach Multiple case research instrumentalizes a (manifest) content analysis based upon qualitative data gathered from the interviewing of the strategic apex of four multinational enterprises, codified in the light of the well-known Weber protocol. Findings The results uncover the existence of a multi-diffusional approach with a bi-directional regime of transferability, where reciprocal transference is non-simultaneous. Operational rigidities are asserted to be stifling the diffusion of capabilities across subsidiaries and hindering higher economies of learning. Research limitations/implications The current paradigm of international capabilization of the sector requires substantial enhancements in its design for the benefit of the firm’s international competitiveness, growth and wealth. Originality/value Organizational capabilities are a determinant of competitiveness. Hitherto, the phenomena of (capabilities) mobility and transferability are still acknowledged as a clear gap. This study opens, therefore, avenues on international capabilization in relation to the modeling and testing of global dynamic capabilities and its replicability across industries.

scholarly journals Location choice, ownership structure and multinational performance

2018 ◽  
Vol 26 (3) ◽  
pp. 250-276 ◽  
Author(s):  
Jinlong Gu ◽  
Yong Yang ◽  
Roger Strange
Keyword(s):  
Ownership Structure ◽  
Multinational Enterprises ◽  
Location Choice ◽  
Developed Countries ◽  
Institutional Perspective ◽  
Data Set ◽  
Content Type ◽  
Foreign Operation ◽  
Investment Location ◽  
Positive Effect

Purpose This paper aims to link location choice and ownership structure to the debate on the multinationality–performance relationship. Design/methodology/approach This paper draws on a panel data set that covers 1,321 emerging economy multinational enterprises (EMNEs) and includes 4,227 observations from 44 emerging economies between 2004 and, 2013. Findings The empirical results find that multinationality has a positive effect on EMNEs’ performance, and that this positive effect is larger for their investments in developed countries than in developing countries. The study also finds that this positive effect of foreign operation in developed countries switch to negative at higher levels of multinationality for privately owned EMNEs than for state-owned EMNEs. Originality/value This paper provides new empirical evidence to support an institutional perspective of the internationalisation of EMNEs that are investing in developed countries, contributing to the multinationality-performance literature, highlighting the importance of foreign direct investment location decision and ownership structure.

Human capital, cultural distance and staffing localization

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Naoki Ando
Keyword(s):  
Human Capital ◽  
Organizational Performance ◽  
Multinational Enterprises ◽  
Cultural Distance ◽  
Data Set ◽  
Subsidiary Performance ◽  
Capital Theory ◽  
Content Type ◽  
Negative Effect ◽  
Positive Effect

Purpose This study aims to explore how a change in the staffing configuration of foreign subsidiaries affects subsidiary performance by focusing on staffing localization. Design/methodology/approach The relationship between localization and subsidiary performance is analyzed from the perspective of human capital. Hypotheses are tested using a panel data set of foreign direct investment by Japanese multinational enterprises. Findings The analysis demonstrates that localization has a positive effect on subsidiary performance when subsidiaries can access a pool of competent local managers in the host country. It also shows that when competent local managers are highly available, localization has a positive effect on subsidiary performance under high cultural distance. In comparison, when the availability of competent local managers is limited and cultural distance is high, localization has a negative effect on subsidiary performance. Originality/value Using human capital theory, this study theorizes how localization, which is a change in the configuration of human capital toward a reliance on local-specific human capital, enhances subsidiary-specific advantages. It introduces the effects of changes in the configuration of human capital over time, into studies on subsidiary staffing. In addition, from a different viewpoint than previous studies, this study proposes one possible path where human capital leads to organizational performance. Specifically, it shows that a change in the configuration of human capital affects subsidiary-specific advantages, which eventually impacts subsidiary performance.

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