The Determinants of Multinational Innovation in Emerging Economies

2018 ◽  
Author(s):  
Patrick J. W. Egan
Keyword(s):  
Emerging Economies ◽  
Multinational Firms ◽  
Economic Sectors ◽  
Country Level ◽  
Patent Counts ◽  
Country Characteristics ◽  
Modelling Strategies ◽  
Econometric Tests ◽  
Resource Sector ◽  
Patenting Activity

This chapter considers innovation outcomes among multinational firms in emerging economies. A variety of econometric tests are conducted, in which innovation is predicted by different firm and country level variables. Innovation is measured in different ways, from patenting activity to firm R&D spending levels. Various datasets are used in this chapter, including firm surveys and patent counts. This chapter tests a number of the hypotheses developed in chapter 2, using different modelling strategies. Statistical analysis is emphasized, however case studies also appear to illustrate the dynamics and mechanisms contained in the models. The firm identifies a number of firm and country characteristics that impact the innovation proclivity of multinational firms. The size of certain economic sectors within the host country, in particular the natural resource sector, also impacts the likelihood of multinational innovation.

Patterns of Innovation among Multinational Firms

2018 ◽  
Author(s):  
Patrick J. W. Egan
Keyword(s):  
Developing Countries ◽  
Foreign Investment ◽  
Multinational Firms ◽  
Service Sector ◽  
Host Countries ◽  
The Core ◽  
Country Level ◽  
Level Data ◽  
Econometric Tests ◽  
Empirical Context

This chapter chronicles the spread of innovation-intensive forms of foreign investment. It is primarily descriptive, and provides the empirical context for the econometric tests in subsequent chapters. The multifaceted concept of innovation is investigated in detail in this chapter. Historical patterns of multinational innovation are presented, followed by more recent empirical trends. The evolving sectoral distribution of FDI in developing countries is examined, as are the potential implications for innovative activities. The chapter extensively details patterns of multinational innovation, through firm surveys and aggregated country level data. Additionally, the extent of innovation spillovers and linkages with economic actors in host countries is considered. Among the core findings in this chapter are that innovation is becoming more common in developing countries, innovation is concentrated in specific regions, and service sector investment represents an increasing share of investment in emerging economies. Firms in some sectors are also more likely to embed in host economies than firms in other sectors.

scholarly journals How Country Affects the Capital Structure Choice: Literature Review and Criticism

2017 ◽  
Vol 9 (4) ◽  
pp. 1 ◽  
Author(s):  
Daniela Venanzi
Keyword(s):  
Capital Structure ◽  
Sample Selection ◽  
International Studies ◽  
Empirical Testing ◽  
Country Level ◽  
Country Characteristics ◽  
Structure Choice ◽  
Country Effect ◽  
Capital Structure Choice ◽  
The Capital Structure

Recent international financial research finds that not only firm- and industry-specific determinants, but also country-specific factors influence a firm’s capital structure. The paper’s aim is twofold. Firstly, it proposes a systematic view of the international studies on country effect since 2000, by highlighting both similarities and differences in terms of tested hypotheses, country-level determinants, expected relationships. The main outcome is a complete framework of the country characteristics, which mostly affect the capital structure choice as well as their respective theoretical rationale. Secondly, based on the above review, some areas of potential development in empirical testing will be identified, regarding test design, sample selection, dependent variable measurement, statistical methodology: the paper’s objective is to critically discuss the state of the art in this field, to hopefully improve the empirical testing of country effect on leverage in further research.

Determinants of stock market reaction to cross-border acquisitions: evidence from emerging economies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Samta Jain ◽  
Smita Kashiramka ◽  
P. K. Jain
Keyword(s):  
Emerging Economies ◽  
Value Creation ◽  
Global Economy ◽  
Emerging Market ◽  
Research Work ◽  
Abnormal Returns ◽  
Content Type ◽  
Cross Border ◽  
Country Level ◽  
Acquiring Firms

PurposeThe global economy has witnessed an exponential increase in cross-border acquisitions (CBAs) by emerging market companies (EMCs), demanding a relook at their internationalization strategy. The purpose of the study is to investigate whether the announcement of CBAs by EMCs creates value for the equity-holders of acquiring firms and identify factors affecting the valuation of acquiring companies.Design/methodology/approachThe paper investigates the announcement impact of CBAs of CNX Nifty 500 Indian and SSE 380 Chinese companies. The event study analysis of 553 Indian and 125 Chinese acquisitions supports the contention that CBAs are indeed a strategic choice of EMCs for value creation.FindingsCBAs generate positive and statistically significant abnormal returns for shareholders of both Indian and Chinese acquirers. The markets, however, differ in terms of their motivations; country-level factors have been observed to exert significant influence on the returns of Indian acquirers. Indian companies experience larger value creation on acquiring firms established in developed, institutionally closer and/or economically distant markets. The findings support the asset-seeking motive of Indian companies.Originality/valueThe research work contributes to the evolving stream of CBAs literature with a focus on the globalization strategies of EMCs. The present study is a modest attempt to lay the foundation for a new theoretical framework (asset-seeking perspective) of overseas acquisitions from emerging economies. The existing studies on emerging economies have emphasized, in isolation, either Indian CBAs or international acquisitions by Chinese firms. Being so, the study is unique and original in the sense that it is a comparative study of India and China.

scholarly journals Institutional Quality, FDI, and Productivity: A Theoretical Analysis

2020 ◽  
Vol 12 (17) ◽  
pp. 7057 ◽  
Author(s):  
Jaewon Jung
Keyword(s):  
Emerging Economies ◽  
Multinational Firms ◽  
Institutional Quality ◽  
Aggregate Productivity ◽  
Fdi Inflows ◽  
Pervasive Technology ◽  
Good Market ◽  
Advanced Economies ◽  
Productivity Gains ◽  
Technology Upgrading

While many important links between institutional quality and foreign direct investment (FDI) inflows and/or between inward FDI and economic development through productivity growth have been uncovered, the full links between emerging and advanced economies are not yet well understood. This paper develops a model of FDI with an explicit distinction between the two economies where domestic and multinational firms using different technologies compete on the final good market and highlights the institutional quality–FDI–productivity link within a unified theoretical general equilibrium framework. We show that an improvement of institutional quality in the emerging economies induces pervasive technology-upgrading effects in the advanced economies, which generates aggregate productivity gains.

scholarly journals Too Many Products: Decentralized Decision Making in Multinational Firms

2011 ◽  
Vol 3 (1) ◽  
pp. 280-306 ◽  
Author(s):  
Catherine Thomas
Keyword(s):  
Decision Making ◽  
Western Europe ◽  
Multinational Firms ◽  
Consumer Preferences ◽  
Laundry Detergent ◽  
Market Outcomes ◽  
Firm Level ◽  
Product Range ◽  
Country Level ◽  
Decentralized Decision Making

I analyze country-level product ranges offered by multinational laundry detergent manufacturers in Western Europe. Observed product range variation across countries exceeds the optimal firm-level response to differences in consumer preferences and retail environments. Counterfactual analysis reveals that increased product range standardization would reduce firm costs and increase profits. These findings are consistent with theory models of local agency, where decentralized decision making can be the constrained optimal organizational form despite the resulting lack of coordination across divisions. My analysis suggests that organizational structure affects product market outcomes and firm performance. (JEL D23, F23, L21, L25, L65)

scholarly journals Exchange Rate Uncertainty and Workers’ Remittances: Empirical Bayesian Approach

2019 ◽  
Vol 3 (2) ◽  
pp. 90-109
Author(s):  
Muhammad Jalib Sikandar ◽  
Hafiz Muhammad Yasin ◽  
Malik Muhammad
Keyword(s):  
Exchange Rate ◽  
Bayesian Approach ◽  
Negative Impact ◽  
Host Countries ◽  
Empirical Bayesian ◽  
Exchange Rate Uncertainty ◽  
Country Level ◽  
Country Characteristics ◽  
Empirical Bayesian Approach

Exchange rate is one of the important determinates of worker’s remittances to a country. Level of exchange rate as well as any fluctuation in it influences the volume of workers’ remittances. The present study uses data of workers’ remittances from ten major countries to Pakistan for the period 1973 to 2012. Uncertainty of exchange rate is estimated through GARCH model. We use Empirical Bayesian approach to compute posterior information (estimates, for which, the GMM estimates are used as prior in order to avoid biasness and inconsistency due to the presence of endogeniety in our model. The Empirical Bayesian estimates are found to be more efficient in terms of significance and correct signs of modeled variables. The findings suggest a significant role of home and host country characteristics in most of the cases. The findings also reveal a negative impact of exchange rate uncertainty on the inflow of remittances. The political instability reveals an insignificant impact on remittances. The study recommends different policy options for different host countries. Apart from the Middle East, the policy for other regions (like USA, Canada, and Germany etc.) must be considered separately to encourage inflow of remittances. Appropriate stabilization measures have to be taken on priority basis to curtail volatility of exchange rates and to ascertain regular inflow of remittances. 

scholarly journals Spanish non-financial corporations and the COVID pandemic: vulnerability, resilience and transformation

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vicente Salas-Fumás
Keyword(s):  
Value Added ◽  
Probit Model ◽  
Labor Cost ◽  
Organizational Capital ◽  
Corporate Sector ◽  
Economic Sectors ◽  
Content Type ◽  
Country Level ◽  
Heterogeneous Effects ◽  
The Impact

Purpose This paper aims to assess the vulnerability and resilience of the Spanish non-financial corporations (NFC) to the shock from the COVID pandemic with consolidated income accounts data, and shows comparative labor productivity and endowment of organizational capital of Spanish firms, as indicators of their capabilities at the outset of the new digital transformation wave proposed by the next generation EU program. Design/methodology/approach The paper first describes the recent evolution (quarterly 2020 data) of the Spanish non-financial corporate sector (gross value added, labor cost, capital formation, profits) in the assessment of the vulnerability and resilience of the sector to the shock of the COVID pandemic. Then second, it estimates a probit model to evaluate the EU country effects in the explanation of the different propensity firms in the European Company Survey database to adopt innovative management and organization practices. Findings In the Spring of 2020, the Spanish NFC were still recovering from the great recession (low resilience), and the severe contraction in value-added and profits of the corporate sector in the first three quarters of the year evidences its high vulnerability. The proved complementarity between organizational and information related assets implies that the low endowment of organizational capital of Spanish firms, could be a severe limitation for the advancement toward digitalization. Research limitations/implications The aggregate corporate sector data used in the analysis of vulnerability and resilience of Spanish firms does not account for the heterogeneous effects of the pandemic across economic sectors (manufacturing and services, for example) and across firms (large versus small ones). Originality/value The paper complements the country-level analysis of the impact of the COVID pandemic in the Spanish economy with the analysis of the impact of the pandemic in the performance of the corporate sector. It provides one of the first analysis of the current endowment of organization capital of Spanish firms and highlights its relevance for productivity growth.

scholarly journals Overview

2020 ◽  
pp. 1-24
Author(s):  
John Page ◽  
Finn Tarp
Keyword(s):  
Structural Change ◽  
Income Inequality ◽  
Natural Resources ◽  
African Countries ◽  
Relative Prices ◽  
Country Level ◽  
Long Run ◽  
Resource Sector ◽  
Competitive Activities ◽  
Oil Gas

For a growing number of African economies the discovery of natural resources is a tremendous opportunity, but one accompanied by considerable risks. Many African countries dependent on oil, gas, and mining have weaker long-run growth, higher rates of poverty and greater income inequality than their less resource-dependent neighbours. One major risk comes from the structure of resource-rich economies themselves. Relative prices make it more difficult to diversify into internationally competitive activities outside the resource sector, thus narrowing the scope for structural change. This chapter focuses on how countries can use natural resources to diversify. Drawing on country-level evidence it explores three key themes: the institutions needed to manage a resource boom, the construction sector, and linking industry to the resource.

The largest financial groups from emerging economies

2018 ◽  
Vol 13 (5) ◽  
pp. 1050-1069 ◽  
Author(s):  
J. Francois Outreville
Keyword(s):  
Foreign Direct Investment ◽  
Emerging Economies ◽  
Direct Investment ◽  
Multinational Firms ◽  
Emerging Countries ◽  
Strong Impact ◽  
Internationalization Process ◽  
Host Countries ◽  
Content Type ◽  
Financial Groups

Purpose Numerous articles contain recommendations as to how emerging countries can attract foreign direct investment on terms that are beneficial to both the investing firm and the host society but very few explore the conditions for firms from emerging countries to invest abroad. The purpose of this paper is twofold: the first is the documentation of the preferred locations of foreign affiliates for the largest financial groups headquartered in emerging countries; and, second, is to identify some of the determinants associated with the location-specific advantages of these host countries. Design/methodology/approach The analysis of the internationalization process of these groups is based on a list of top financial groups ranked by total assets. In the empirical section, the factors that explain the choice of these locations by multinational firms are categorized as resources seeking, market seeking, efficiency-seeking variables and cultural variables. Findings There is empirical evidence that institutions prefer to invest in foreign locations that minimize some dimensions of the culture. Other factors like the role of efficiency variables, i.e. trade efficiency, political risk and government effectiveness, in host countries also have a strong impact on the determinants of the internationalization process. Originality/value The paper puts forward a framework for analyzing determinants of foreign direct investment of multinational financial groups from emerging economies.

Sign in / Sign up

Export Citation Format

Share Document