scholarly journals On MNC-Host Government Relations: How Finnish Firms Respond to National and Regional Policies in ASEAN

2017 ◽  
Vol 34 (2) ◽  
pp. 54-76 ◽  
Author(s):  
Erja Kettunen
Keyword(s):  
Host Country ◽  
Financial Crises ◽  
International Political Economy ◽  
Trade Agreement ◽  
Southeast Asian ◽  
Foreign Firms ◽  
Foreign Direct Investments ◽  
Regional Production ◽  
Host Government ◽  
The Impact

Combining literature from international political economy, international business, and institutional approaches to business studies, this article discusses foreign firms' relationship with the public sector in Southeast Asia. It focuses on the perceptions of the firms on host country policies toward foreign direct investments (FDI) and the impact of global financial crises and regional economic integration on the firms' strategies. The multinational company (MNC)-host government relationship is seen as a cooperative and continual bargaining within a specific institutional framework. Based on interviews with managers of subsidiaries originating from Finland, it is found that the regulatory environment of Association of Southeast Asian Nations (ASEAN) countries varies from easy to difficult with regard to policies, bureaucracy and protectionism. These pose institutional constraints for the firms, with additional economic constraints caused by global financial crises. Contrary to expectations, the ASEAN free trade agreement does not figure in the firms' investment strategies. This is explained by three findings: most of the firms serve the domestic host country market; the firms operate global rather than ASEAN-wide regional production chains; the firms represent industries that are not typical in Southeast Asian regional production networks.

Climate risk and private participation projects in infrastructure

2019 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nathaniel C. Lupton ◽  
Alfredo Jiménez ◽  
Secil Bayraktar ◽  
Dimitrios Tsagdis
Keyword(s):  
Climate Risk ◽  
Current Debate ◽  
Foreign Direct Investments ◽  
Government Ownership ◽  
Project Failure ◽  
Content Type ◽  
Private Participation ◽  
Host Government ◽  
The Impact ◽  
Project Level

Purpose The purpose of this paper is to investigate the impact of climate risk on the success vs failure of foreign direct investments (FDIs) in private participation infrastructure (PPI) projects. The authors also consider the extent to which project-level characteristics mitigate such risks. Design/methodology/approach The authors study a sample from the World Bank covering 18,846 projects in 111 countries from 2004 to 2013. The authors apply logistic regressions to determine the impact of climate risk and mitigating project characteristics on project failure. Findings The authors find that higher levels of climate risk at the host country level are associated with higher risk of project failure. The authors also find that the disadvantage of higher climate risk is weakened by two project-level characteristics, namely, the inclusion of host government ownership in the project consortium and the size of the project. Originality/value The research contributes to the current debate about the impact of climate risks on international business ventures. The authors demonstrate that climate risk is a locational disadvantage for FDI in PPI projects. The authors establish that the “fittest” projects in locations characterized by higher climate risk tend to be those that involve host government participation in their ownership structure as well as those of larger sizes.

scholarly journals The Impact of Protectionism on the Completion and Duration of Cross-Border Acquisitions

2021 ◽  
Author(s):  
◽  
Rehanna Callaghan
Keyword(s):  
National Security ◽  
Host Country ◽  
Firm Size ◽  
Financial Services ◽  
Foreign Firms ◽  
Gdp Growth ◽  
Target Firm ◽  
Cross Border ◽  
Time Required ◽  
The Impact

<p>This study investigates the impact of protectionism in a host country on the completion likelihood of an announced cross-border acquisition and the time required to complete the acquisition. Adopting a legitimacy perspective, I identify and test boundary conditions at the firm and national levels to study the relationship between protectionism and cross-border acquisition completion and duration. I hypothesise that in host countries with a high level of protectionism, as reflected by the level of non-tariff barriers, cross-border acquisitions are less likely to be completed and the time taken to close the acquisition deal increases. I also propose that the relationships between protectionism and acquisition outcomes are moderated by critical target firm characteristics and the host country's economic condition. Specifically, these moderators include target firm size, target firm performance, the degree to which the target industry is sensitive to national security concerns, and the host country's GDP growth. I test these hypotheses using a sample of 675 cross-border acquisition attempts by firms in the manufacturing and services industries (excluding financial services) into the U.S. and Canada between 1995 and 2015. The results of the statistical analysis support the prediction that the higher the degree of protectionism, the lower likelihood of acquisition completion and the longer the duration is between acquisition announcement and completion. Findings also support the predicted moderating effects of the target firm size, performance and national security concern. However, the hypothesised moderating effect of the host country's GDP growth was not supported by the results. This finding suggests that host country protectionism impacts cross-border acquisition attempts, irrespective of the host country's economic development. These findings have significant implications for legitimacy-based explanations of cross-border acquisitions. In particular, the results of this study indicate that when protectionism is high, the host country is more likely to raise concerns around the legitimacy of foreign firms. In turn, these firms face adverse host country scrutiny which can result in a failed acquisition attempt, or an extended and therefore, costlier acquisition deal. The framework and findings of this study contribute to an institution-based view and, in particular, to a legitimacy-based perspective in the research on the internationalisation of firms.</p>

scholarly journals The Impact of Protectionism on the Completion and Duration of Cross-Border Acquisitions

2021 ◽  
Author(s):  
◽  
Rehanna Callaghan
Keyword(s):  
National Security ◽  
Host Country ◽  
Firm Size ◽  
Financial Services ◽  
Foreign Firms ◽  
Gdp Growth ◽  
Target Firm ◽  
Cross Border ◽  
Time Required ◽  
The Impact

<p>This study investigates the impact of protectionism in a host country on the completion likelihood of an announced cross-border acquisition and the time required to complete the acquisition. Adopting a legitimacy perspective, I identify and test boundary conditions at the firm and national levels to study the relationship between protectionism and cross-border acquisition completion and duration. I hypothesise that in host countries with a high level of protectionism, as reflected by the level of non-tariff barriers, cross-border acquisitions are less likely to be completed and the time taken to close the acquisition deal increases. I also propose that the relationships between protectionism and acquisition outcomes are moderated by critical target firm characteristics and the host country's economic condition. Specifically, these moderators include target firm size, target firm performance, the degree to which the target industry is sensitive to national security concerns, and the host country's GDP growth. I test these hypotheses using a sample of 675 cross-border acquisition attempts by firms in the manufacturing and services industries (excluding financial services) into the U.S. and Canada between 1995 and 2015. The results of the statistical analysis support the prediction that the higher the degree of protectionism, the lower likelihood of acquisition completion and the longer the duration is between acquisition announcement and completion. Findings also support the predicted moderating effects of the target firm size, performance and national security concern. However, the hypothesised moderating effect of the host country's GDP growth was not supported by the results. This finding suggests that host country protectionism impacts cross-border acquisition attempts, irrespective of the host country's economic development. These findings have significant implications for legitimacy-based explanations of cross-border acquisitions. In particular, the results of this study indicate that when protectionism is high, the host country is more likely to raise concerns around the legitimacy of foreign firms. In turn, these firms face adverse host country scrutiny which can result in a failed acquisition attempt, or an extended and therefore, costlier acquisition deal. The framework and findings of this study contribute to an institution-based view and, in particular, to a legitimacy-based perspective in the research on the internationalisation of firms.</p>

The Impact of the Foreign Corrupt Practices Act on Competitiveness, Bribery, and Investment

2020 ◽  
Vol 22 (1) ◽  
pp. 105-126
Author(s):  
Maria Arbatskaya ◽  
Hugo M Mialon
Keyword(s):  
Host Country ◽  
Foreign Firm ◽  
Foreign Firms ◽  
Host Countries ◽  
Foreign Corrupt Practices Act ◽  
Total Investment ◽  
The Impact ◽  
The U.S

Abstract The Foreign Corrupt Practices Act (FCPA) prohibits U.S.-related firms from making bribes abroad. We analyze the FCPA’s effects in a model of competition between a U.S. and foreign firm for contracts in a host country. If the FCPA only applies to the U.S. firm, it reduces that firm’s competitiveness and either increases bribery by the foreign firm or reduces overall investment. If the FCPA also applies to foreign firms, it reduces total bribery, and in host countries with high corruption levels, it increases total investment. The model suggests that the FCPA will deter bribery and stimulate investment while not disadvantaging U.S. firms if its enforcement is aimed at firms who engaged in bribery in highly corrupt countries and whose main competitors are also subject to the FCPA.

Mining Junior, Major Political Risks

2014 ◽  
Vol 1 (1) ◽  
pp. 24-47
Author(s):  
J. Edward Conway
Keyword(s):  
Political Economy ◽  
Strategic Management ◽  
International Business ◽  
Host Country ◽  
International Political Economy ◽  
Stock Exchange ◽  
The United States ◽  
Institutional Distance ◽  
Foreign Firms ◽  
Political Risks

Within the discipline of international business, institution-based theories on strategic management concentrate on how foreign firms conform to their local operating environment. One of the leading theories extending from such research is the idea that a foreign firm’s success in a given country rests on the firm’s ability to “bridge” the institutional (or structural) distance between the firm’s home country and host country, whether that distance be cultural, regulatory, political, cognitive or any given number of possible structural measures. The greater the gap between home and host country, proponents of institutional distance claim, the more challenging it will be for the firm to be successful in the host environment. In this article, we develop the concept of institutional distance through a single qualitative case study of a junior mining firm, Frontier Mining, initially headquartered in the United States and listed on the London Stock Exchange, but with the vast majority of its operations located in Kazakhstan. We approach Frontier and the concept of institutional distance less through the lens of international business and more through the interdisciplinary lens typical of regional studies: how Frontier conforms to the local Kazakh environment is equally telling for those interested in strategic management as it is for those concerned with the intersection of the international political economy and the domestic political economy of a post-Soviet state in transition.

scholarly journals FDI Uppers and Downers: A Macedonian Case Study

2017 ◽  
Vol 11 (1) ◽  
Author(s):  
Mico Apostolov
Keyword(s):  
Business Environment ◽  
Foreign Firms ◽  
Foreign Direct Investments ◽  
Domestic Economy ◽  
Case Study Method ◽  
Qualitative Research Methodology ◽  
Restructuring Process ◽  
Exogenous Factors ◽  
The Impact

AbstractThis article examines how foreign direct investments influence the performance and entrepreneurship of domestic firms, a crucial question for economies – especially transition economies – driven by the incursion of global, exogenous factors. This research uses a qualitative research methodology, and specifically a case study method. The country in question is Macedonia, a Southeast European economy. Further, the study is interested in the way foreign direct investments shape the overall business environment. Overall, the results point to the influence of foreign firms in assisting business activity. The impact of foreign investment is, in general, positive, and tends to influence the restructuring process of domestic economy.

Institutional distances, resources and entry strategies

2017 ◽  
Vol 12 (1) ◽  
pp. 58-78 ◽  
Author(s):  
Wiboon Kittilaksanawong
Keyword(s):  
Host Country ◽  
Foreign Firms ◽  
Financial Resources ◽  
Organizational Slack ◽  
Foreign Direct Investments ◽  
Firm Resources ◽  
Firm Level ◽  
Content Type ◽  
Entry Strategies ◽  
Marketing Resources

Purpose The purpose of this paper is to examine the effect of institutional distances (IDs) on the choices of host country and the entry strategies, taking into account various firm resources. Design/methodology/approach Institutions are quantified in terms of regulatory, normative, and cognitive aspects. Firm resources include technological and marketing resources, organizational slack, and internally generated and externally raised financial resources. The research context is foreign direct investments of Taiwanese listed firms in the electronics and computer industry from the year 2000 to 2007, which include 732 companies investing in 3,691 projects in 41 countries. Findings The tacitness of technological resources inhibits their transfer to distant countries. Marketing resources are more transferable to distant countries in terms of explicit regulative institutions. Organizational slack may weaken motives of firms in entering distant countries. Internally generated financial resources encourage risky investments in distant countries in terms of regulative institutions. Externally raised financial resources, due to their providers, restrict firms to finance risky projects in distant countries. High-control entry strategies are preferred to minimize appropriation risks regardless of funding sources. Involving local partners through a shared ownership provides institutional knowledge for foreign firms to mobilize local legitimacy in host countries. Firm resources directly and indirectly determine entry strategies through perceived IDs. Originality/value This study bridges the effect of firm-level resources and country-level institutions on the choices of host country and the entry strategies. It is among the first to quantify institutions in terms of their regulatory, normative, and cognitive aspects.

Foreign Ownership and Corporate Social Responsibility: The Case of an Emerging Market

2020 ◽  
pp. 097215092092044 ◽  
Author(s):  
Kalpana Tokas ◽  
Kartik Yadav
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Host Country ◽  
Emerging Market ◽  
Business Group ◽  
Foreign Ownership ◽  
Foreign Firms ◽  
Domestic Firms ◽  
Corporate Social ◽  
The Impact

This article adds to the international business and corporate social responsibility (CSR) literature by investigating the impact of foreign ownership on the CSR expenditures of firms in a host country, within an emerging market context. Previous studies have examined the relationship between ownership structure and CSR engagement, primarily for the case of developed nations. This article explores the linkages between the CSR spending of foreign-owned firms in relation to their domestic counterparts for the Indian context. India provides a unique case because of the landmark legislation undertaken in 2014 that mandated CSR spending for firms based in India. This study examines the motivations that guide the CSR strategies of foreign firms in host nations and attempts to explain the usage of CSR spending as a tool to overcome Liability of Foreignness and achieve legitimacy using the neo-institutional theory. Within this unique setting, a sample of 3591 firm years in India for 2014–2018 is used to examine whether foreign-owned firms indulge in a higher CSR expenditure relative to domestic firms, using a random-effects model. Further, it is also examined whether business group-affiliated foreign firms spend differently on CSR than standalone foreign enterprises in the host nation. The results show that foreign ownership is associated with a higher CSR spending than domestic firms by an average of ₹1.35 million in the host country. Furthermore, among foreign firms, a business group affiliation leads to a higher CSR spending by an average of ₹1.55 million as compared to stand-alone foreign firms.

The effect of foreign firms’ population density on exit likelihood in a host country

2019 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yuping Zeng ◽  
Dean Xu
Keyword(s):  
Population Density ◽  
Host Country ◽  
Design Methodology ◽  
Foreign Firm ◽  
Foreign Firms ◽  
Data Set ◽  
Content Type ◽  
History Of ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between a foreign firm’s likelihood to exit a host country and the population density of foreign firms in its industry in that county, as well as the moderating influences of this relationship. The authors hypothesize that a foreign firm’s likelihood to exit has a U-shaped relationship with foreign firms’ population density in the industry and this relationship will be weakened when: the foreign firm is located in a region where foreign firm presence is high; the foreign firm is in an industry that has a longer history of foreign direct investment; the firm has a longer tenure in the host country; and the firm is more adapted to the market and institutional environments of the host country. Design/methodology/approach The authors test the hypotheses using a data set containing over 45,000 foreign firms in China between 1998 and 2007. Findings The results show that the exit likelihood of a foreign firm has a U-shaped relationship with foreign firms’ population density in the firm’s industry in the host country. Furthermore, this relationship is moderated by the population density of foreign firms in the region where the firm resides, the length of time since the first foreign entrant in the industry and the extent of the focal firm’s local adaptation. Originality/value The study contributes to organizational ecology theory and the international business literature by extending the density-dependence model to the study of foreign firm survival/exit. Whereas a foreign firm’s fate in the host country is heavily influenced by the population density of foreign firms in its industry, it can borrow legitimacy from other sources, or try to create legitimacy through its own actions, to reduce the impact of such density effects.

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