Multinational Firm Growth and Sustainability Responses to Dynamics of Business Regulations in Host Market

Dynamics in business regulations measured by ease of doing business is a new approach that indicates countries’ business climate reforms toward suitability for investment growth. The present study took three variables from the ease of doing business data and evaluated them toward predictive power of FDI flow to 19 Sub-Saharan African countries by using fixed-effect model. Based on the analysis, the official time, procedures, costs, and minimum capitals in starting a business stage, enterprise registrations and official permissions of the firm establishment had a material effect on investment growth. Even though, on one side trade openness and the growing market size was seen as an opportunity, the deep-rooted corruption and landlocked was the trap for the smooth growth of firms in the region.

Substitution across profit shifting methods and the impact on thin capitalization rules

Thin capitalization rules limit firms’ ability to deduct internal interest payments from taxable income, thereby restricting debt shifting activities of multinational firms. Since multinational firms can limit their tax liability in several ways, regulation of debt shifting may have an impact on other profit shifting methods. We therefore provide a model in which a multinational firm can shift profits out of a host country by issuing internal debt from an entity located in a tax haven and by manipulating transfer prices on internal goods and services. The focus of this paper is the analysis of regulatory incentives, $$(i)$$ ( i ) if a multinational firm treats debt shifting and transfer pricing as substitutes or $$(ii)$$ ( i i ) if the methods are not directly connected. The results provide a new aspect for why hybrid thin capitalization rules are used. Our discussion in this paper explains why hybrid rules can result in improvements in welfare if multinational firms treat methods of profit shifting as substitutes.

The Effects of Foreign Multinationals on Workers and Firms in the United States*

Governments go to great lengths to attract foreign multinationals because they are thought to raise the wages paid to their employees (direct effects) and to improve outcomes at local domestic firms (indirect effects). We construct the first U.S. employer-employee dataset with foreign ownership information from tax records to measure these direct and indirect effects. We find the average direct effect of a foreign multinational firm on its U.S. workers is a 7 percent increase in wages. This premium is larger for higher-skilled workers and for the employees of firms from high GDP per capita countries. We find evidence that it is membership in a multinational production network—instead of foreignness—that generates the foreign-firm premium. We leverage the past spatial clustering of foreign-owned firms by country of ownership to identify the indirect effects. An expansion in the foreign-multinational share of commuting-zone employment substantially increases the employment, value added, and—for higher-earning workers—wages at local domestic-owned firms. Per job created by a foreign multinational, our estimates suggest annual gains of 13,400 USD to the aggregate wages of local incumbents, two-thirds of which are from indirect effects. Our estimates suggest that—via mega-deals for subsidies from local governments—foreign multinationals are able to extract a sizable fraction of the local surplus they generate.

Internalising and internationalising country specific CSR practices of a Japanese multinational company

Purpose Applying mainstream, Western-centric corporate social responsibility (CSR) theory to make sense of CSR practices of multinational firms of non-Western origin seems to be problematic for CSR theory and practice. The purpose of this study is to critically analyse the CSR integration journey of a Japanese multinational firm with a view to understanding CSR integration in a global business context. Design/methodology/approach This study used a qualitative research method using a single case study approach to investigate a contemporary phenomenon within its real-life context. A theoretical lens of seven patterns of CSR integration interwoven with Japanese and mainstream CSR discourses is used to make sense of internalisation and internationalisation process. Findings Main findings are presented under four themes: product harm crisis as a call for CSR, CSR governance and bottom up initiatives, recycling oriented CSR and product designing, co-existing Japanese CSR in the global marketplace. An external misfit of a firm’s practice in the domestic market can lead to internalising country-specific CSR through CSR integration resulting in successful internationalisation of country-specific CSR practices. Research limitations/implications Country-specific CSR integration follows context-specific routines and practices; this process can be shaped and reshaped by the prevailing international CSR discourse due to internationalisation of a firm’s operation. Originality/value Although CSR is viewed as a fundamental strategic priority driving firms to focus on shared value-creating products and services, how best a firm can integrate CSR into an existing business model is unclear. This gap is addressed in this current study.

Multinationality, Capital Structure, and Cost of Capital of Non-Financial Firm Listed on Indonesia Stock Exchange

Multinational firms are firm that do business internationally, the higher degree of multinationality of a firm, they have more ability to get greater funding because there are more chances to get funding from foreign country. Because of that condition, multinational firms have different cost of capital with domestic firms. The main purpose of this study is to understand the impact of degree of multinationality, capital structure, firm size, profitability and growth opportunity to cost of capital. Panel data is used on this research and multiple linear regression analysis is used as analytical model. The result suggest that Indonesia multinational firms have lower cost of capital, cost of equity, and cost of debt than Indonesia domestic firms. The study found that capital structure is negatively related to cost of capital, this means that Indonesia multinational firm use more debt than Indonesia domestic firms, and so lower the cost of debt after tax and hence the cost of capital.