Multinational Enterprise, Innovation, and Development: Theoretical Perspectives

2018 ◽  
Author(s):  
Patrick J. W. Egan
Keyword(s):  
Political Economy ◽  
International Development ◽  
Value Chain ◽  
Multinational Firms ◽  
Multinational Enterprise ◽  
Firm Level ◽  
Business Studies ◽  
Theoretical Perspectives ◽  
Prior Literature ◽  
Enterprise Innovation

This chapter provides the theoretic background and working hypotheses for the empirical tests that follow in subsequent chapters. The book is informed by substantial literature in several academic subfields, including but not limited to international political economy, international business studies, development economics, and global value chain research. This chapter builds a cumulative theoretic framework for interpreting multinational innovation and comparative institutionalist perspectives. Prior literature and debate inform the hypotheses presented in this chapter, which involve both country and firm level attributes and resulting investment patterns. The chapter considers ideas from international development studies regarding the role of multinational firms in processes of country growth and technological upgrading, theories of the firm and contemporary pressures for polycentric innovation models, and institutionalist perspectives from political science and political economy. This chapter also provides working definitions for key concepts and how institutions might be analytically separated from host country policies. The chapter emphasizes the theoretic support for the causal mechanisms supposed in the various hypotheses.

Industrial proximity and vertical integration of multinational firms

2018 ◽  
Vol 22 (1) ◽  
pp. 50-67
Author(s):  
Haeyeon Yoon ◽  
Jung Hur
Keyword(s):  
Vertical Integration ◽  
Value Chain ◽  
Multinational Firms ◽  
Market Access ◽  
Multinational Firm ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Parent Firm ◽  
Plant Allocation

Purpose With the rise of foreign direct investment and global value chain, firms organize their plant allocation across countries to take advantage of production cost reduction opportunities and market access. The purpose of this paper is to investigate the production-supply strategies of Korean firms over foreign and domestic affiliates, using industrial proximity between Korean parent firms and their affiliates. Design/methodology/approach In this paper first, using the Survey of Business Activities provided by Statistics Korea, the authors build a matching data set between a parent firm and each affiliate both in domestic and foreign countries. Second, the authors define their vertical relationship based on the input requirement coefficients of the Input-Output table (IO table). Furthermore, using the same IO table, the authors define the proximity for the pairs of the parent firm and the affiliates in domestic and foreign markets. Then, the authors test the relationship between the parent firm’s choice for foreign affiliate and their proximity index. Findings The main result shows that the stronger the industrial proximity between a final good producing firm and its input supplying affiliate is, the more likely the cross-border vertical integration is to be observed than the domestic vertical integration. Also, the authors find that the firms whose production structure accords the main result outperform and conduct more self-R&D and less R&D on trust than the other firms. Originality/value The finding is novel and original in a sense that the authors showed for the first time at firm-level microdata evidence that there is an optimal pattern of organizing supply chains within a multinational firm.

scholarly journals The Political Economy of the Groundnut Value Chain in Malawi: Its Re-Emergence Amidst Policy Chaos, Strategic Neglect, and Opportunism

2021 ◽  
Author(s):  
Blessings Chinsinga ◽  
Mirriam Matita
Keyword(s):  
Political Economy ◽  
Value Chain ◽  
The Political ◽  
Analysis Framework ◽  
Issue Area ◽  
Theoretical Perspectives ◽  
Political Economy Analysis ◽  
Political Economic ◽  
Political Settlement ◽  
Economy Analysis

This paper explores the political economy of the groundnut value chain in Malawi. The paper uses a combination of insights from the theoretical perspectives of political settlement, rents and policymaking to examine this value chain. Fused together, these theoretical perspectives underpin a political economy analysis framework, which entails systematically mapping all key actors in an issue area; identifying their interests and recognising their forms of power (political, economic, social, and ideological); understanding their relationships with each other; and appreciating the issues, narratives, and ideas that shape how and why they interact with each other.

scholarly journals Global Production with Export Platforms*

2016 ◽  
Vol 132 (1) ◽  
pp. 157-209 ◽  
Author(s):  
Felix Tintelnot
Keyword(s):  
General Equilibrium ◽  
Host Country ◽  
Foreign Investment ◽  
Multinational Firms ◽  
Multinational Enterprise ◽  
Fixed Costs ◽  
Firm Level ◽  
Level Data ◽  
Multinational Production ◽  
Foreign Affiliates

Abstract Most international commerce is carried out by multinational firms, which use their foreign affiliates both to serve the market of the host country and to export to other markets outside the host country. In this article, I examine the determinants of multinational firms’ location and production decisions and the welfare implications of multinational production. The few existing quantitative general equilibrium models that incorporate multinational firms achieve tractability by assuming away export platforms—that is, they do not allow foreign affiliates of multinationals to export—or by ignoring fixed costs associated with foreign investment. I develop a quantifiable multicountry general equilibrium model, which tractably handles multinational firms that engage in export platform sales and that face fixed costs of foreign investment. I first estimate the model using German firm-level data to uncover the size and nature of costs of multinational enterprise and show that the fixed costs of foreign investment are large. Second, I calibrate the model to data on trade and multinational production for twelve European and North American countries. Counterfactual analysis reveals that multinationals play an important role in transmitting technological improvements to foreign countries and that the pending Canada-EU trade and investment agreement could divert a sizable fraction of the production of EU multinationals from the U.S. to Canada.

Contemporary Principles of Heterodox Political Economy

2009 ◽  
pp. 38-57 ◽  
Author(s):  
Ph. O’Hara
Keyword(s):  
Economic Growth ◽  
Political Economy ◽  
Economic Development ◽  
Ethnic Discrimination ◽  
Mainstream Economics ◽  
Theoretical Perspectives ◽  
Analytical Review ◽  
New Ideas ◽  
Historical Specificity ◽  
Scientific Results

In this analytical review the author describes the main trends in the modern heterodox political economy as an alternative to mainstream economics. Historical specificity as well as the contradictory and uneven character of economic development are examined in detail. The author also discusses problems of class, gender and ethnic discrimination and their influence on economic growth. It is shown that there are tendencies to convergence of different theoretical perspectives and schools, common themes, topics of research and conceptual apparatus are being formed. The forces of integration and differentiation help establish new ideas and receive interesting scientific results in such fields as development economics, macroeconomics and international economics.

Capitalising upon Globalisation

2018 ◽  
Author(s):  
David M. Webber
Keyword(s):  
Political Economy ◽  
Foreign Policy ◽  
International Development ◽  
Macroeconomic Policy ◽  
Domestic Policy ◽  
Policy Decisions ◽  
Gordon Brown ◽  
Development Policies ◽  
At Home

Having mapped out in the previous chapter, New Labour’s often contradictory and even ‘politically-convenient’ understanding of globalisation, chapter 3 offers analysis of three key areas of domestic policy that Gordon Brown would later transpose to the realm of international development: (i) macroeconomic policy, (ii) business, and (iii) welfare. Since, according to Brown at least, globalisation had resulted in a blurring of the previously distinct spheres of domestic and foreign policy, it made sense for those strategies and policy decisions designed for consumption at home to be transposed abroad. The focus of this chapter is the design of these three areas of domestic policy; the unmistakeable imprint of Brown in these areas and their place in building of New Labour’s political economy. Strikingly, Brown’s hand in these policies and the themes that underpinned them would again reappear in the international development policies explored in much greater detail later in the book.

scholarly journals Information related service trade within firms: evidence from firm-level data in Germany

2021 ◽  
Author(s):  
Kurt A. Hafner ◽  
Jörn Kleinert
Keyword(s):  
Multinational Firms ◽  
Economies Of Scope ◽  
It Services ◽  
Firm Level ◽  
It Service ◽  
Level Data ◽  
Related Service ◽  
Foreign Affiliates ◽  
Knowledge Intensive ◽  
Parent Companies

AbstractMulti-unit firms have productivity advantages over competitors because of their use of a non-rival asset—firm-specific knowledge—in several units. Using knowledge-intensive services leads to economies of scope in production by multi-unit firms. Such headquarter are usually supplied by parent companies and serve to link different firm units. Headquarter services are difficult to quantify in statistics or surveys, except when they cross-borders and the exchange of services between MNEs and their offshore subsidiaries becomes apparent. This study therefore focuses on IT service imports to explain productivity differences among foreign affiliates of multinational firms in Germany. The authors base the analysis on the population of foreign multinational firms active in Germany and analyze what effect the import of IT services has on their productivity. They find that IT headquarter service flows have significant impacts on foreign affiliates’ productivity in general and US affiliates in particular. As the average IT-service flows (per firm and partner) from parent countries are significantly higher for US affiliates than non-US affiliates, they conclude that the import of IT services from the parent-company is a source of the productivity advantages of US affiliates in Germany.

Multinational Banks and IMF Conditionality

2021 ◽  
Author(s):  
Trung A Dang ◽  
Randall W Stone
Keyword(s):  
Political Economy ◽  
Investment Decisions ◽  
Location Decisions ◽  
Preferential Treatment ◽  
Firm Level ◽  
Financial Firms ◽  
Level Data ◽  
Firm Level Data ◽  
Imf Programs ◽  
Investment Location

Abstract We find firm-level evidence that US banks receive preferential treatment in countries under IMF conditionality. We rely on investment location decisions to infer firms’ expectations about future profits and find that US firms are approximately 53 percent more likely to acquire financial firms in countries under financial conditionality. IMF programs without financial conditionality and FDI in other sectors serve as placebo tests. Financial conditionality has weak effects on investment decisions by non-US firms, which implies a political-economy interpretation. Firm-level data indicate that the distinctive behavior of US firms is not due to advantages of scale or to a US-firm fixed effect, but to US influence in the IMF. Firms from other major IMF shareholders benefit as well, but the effects are much weaker. The effects are concentrated in the politically relevant firms that have local affiliates, which is consistent with the interpretation that firms lobby for preferential treatment.

Job satisfaction in the global MNE: does distance matter?

2019 ◽  
Vol 26 (3) ◽  
pp. 337-362
Author(s):  
Gwyneth Edwards ◽  
Abdulrahman Chikhouni ◽  
Rick Molz
Keyword(s):  
Job Satisfaction ◽  
Organizational Behavior ◽  
Business Strategy ◽  
Negative Impact ◽  
Multinational Enterprise ◽  
Past Research ◽  
Institutional Distance ◽  
High Tech ◽  
Firm Level ◽  
Content Type

Purpose The purpose of this paper is to investigate how the relative institutional distance of the subsidiary from the multinational enterprise (MNE) headquarters influences job satisfaction in the subsidiary. The authors argue that job satisfaction in the MNE subsidiary will be influenced by the institutional distance between the firm’s home (headquarter) and host (subsidiary) countries, such that the greater the institutional distance, the less satisfied the subsidiary employees. The authors also argue that the degree of function interdependence (global vs local roles) will moderate this relationship, such that high interdependence will result in lower job satisfaction as distance increases. Design/methodology/approach Using data from a global high-tech Canadian MNE, consisting of over 15,000 employees located in 19 subsidiaries, the research undertakes an empirical investigation that identifies if and how job satisfaction varies between countries and tests the influence of subsidiary-level institutional distance from the headquarters on subsidiary-level job satisfaction, using a multilevel model. Findings The results demonstrate that subsidiary distance from the headquarters has a complex effect on subsidiary-level job satisfaction; in some distances, no effect is found, while in others, either some or all job satisfaction facets are affected (depending on the distance and facet) in both positive and negative ways. Unlike much of the past research on distance, which has treated distance as a barrier to be overcome or reduce (Stahl et al., 2016), the paper’s finding demonstrate that “negative” distance operates independently (and at varying strengths and significance) than “positive” distance, due to underlying mechanisms. Research limitations/implications There is a real opportunity to push ahead on linking international business strategy research with organizational theory and organizational behavior research. To do so, it requires not only a positive organizational scholarship approach (Stahl et al., 2016) but also methods that will allow researchers to study the influence of distance on mechanisms and processes, as opposed to stand-alone variables. The authors therefore suggest that future work in this area pursue qualitative methods as called for by Chapman et al. (2008). Practical implications Findings are surprising, in that results vary across job facets and distances. Practitioners need to therefore focus on the mechanisms that influence job satisfaction, not just differences and their potential negative impact. Originality/value The firm-level study provides a rich perspective on the complex way in which country-level differences influence subsidiary-level job satisfaction.

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