Do multinationals really prefer to enter culturally distant countries through greenfields rather than through acquisitions? The role of parent experience and subsidiary autonomy.

Prior research has argued that multinational enterprises (MNEs) prefer to enter culturally distant countries through greenfields rather than through acquisitions, since acquisitions in such countries are costlier to manage. This argument contains two hidden assumptions: (1) the additional costs of acquisitions in culturally distant countries are the same for all MNEs; and (2) such acquisitions have no benefits over their greenfield counterparts. In this paper we relax these two assumptions by arguing that an MNE's preference for greenfields in culturally distant countries depends on its international and host-country experience, and on the level of autonomy it plans to grant the focal subsidiary. Analyzing 171 wholly owned greenfield investments and full acquisitions made by Dutch MNEs in 35 countries, we find that these MNEs prefer to enter culturally distant countries through greenfields, but that this preference is lower when they have little international experience, or plan to grant the focal subsidiary considerable autonomy in marketing. [ABSTRACT FROM AUTHOR]

Down with MNE-centric theories! Market entry and expansion as the bundling of MNE and local assets

Both Anderson and Gatignon and the Uppsala internationalization model see the initial mode of foreign market entry and subsequent modes of operation as unilaterally determined by multinational enterprises (MNEs) arbitraging control and risk and increasing their commitment as they gain experience in the target market. OLI and internalization models do recognize that foreign market entry requires the bundling of MNE and complementary local assets, which they call location or country-specific advantages, but implicitly assume that those assets are freely accessible to MNEs. In contrast to both of these MNE-centric views, I explicitly consider the transactional characteristics of complementary local assets and model foreign market entry as the optimal assignment of equity between their owners and MNEs. By looking at the relative efficiency of the different markets in which MNE and complementary local assets are traded, and at how these two categories of assets match, I am able to predict whether equity will be held by MNEs or by local firms, or shared between them, and whether MNEs will enter through greenfields, brownfields, or acquisitions. The bundling model I propose has interesting implications for the evolution of the MNE footprint in host countries, and for the reasons behind the emergence of Dragon MNEs.

Do Foreign Greenfields Outperform Foreign Acquisitions or Vice Versa? An Institutional Perspective.

Prior studies of the comparative performance of greenfields and acquisitions have advanced competing arguments, with some arguing that greenfields should outperform acquisitions because acquisitions are costlier to integrate, and others that acquisitions should outperform greenfields because greenfields suffer from a liability of newness. Moreover, while the costs of integration and the liability of newness are at their greatest during a subsidiary's first years, prior studies have tested their competing arguments on samples containing older subsidiaries. We extend these prior studies by (1) developing an institutional theory-based framework that simultaneously considers the costs of integration and the liability of newness, (2) recognizing that both types of costs vary with the level of subsidiary integration, and (3) focusing on the stage of their life during which subsidiaries predominantly incur these costs. To measure subsidiary performance, we ask managers of Dutch multinationals how their ex ante performance expectations compare to the subsidiary's ex post performance during its first two years. Analysing a sample of 191 foreign subsidiaries and controlling for entry mode self-selection and other factors, we find that acquisitions outperform greenfields at low and intermediate levels of subsidiary integration, but that greenfields outperform acquisitions at higher integration levels. [ABSTRACT FROM AUTHOR]

Why and how FDI stocks are a biased measure of MNE affiliate activity

Many international business (IB) studies have used foreign direct investment (FDI) stocks to measure the aggregate value-adding activity of multinational enterprises (MNE) affiliates in host countries. We argue that FDI stocks are a biased measure of that activity, because the degree to which they overestimate or underestimate affiliate activity varies systematically with host-country characteristics. First, most FDI into countries that serve as tax havens generate no actual productive activity; thus FDI stocks in such countries overestimate affiliate activity. Second, FDI stocks do not include locally raised external funds, funds widely used in countries with well-developed financial markets or volatile exchange rates, resulting in an underestimation of affiliate activity in such countries. Finally, the extent to which FDI translates into affiliate activity increases with affiliate labor productivity, so in countries where labor is more productive, FDI stocks also result in an underestimation of affiliate activity. We test these hypotheses by first regressing affiliate value-added and affiliate sales on FDI stocks to calculate a country-specific mismatch, and then by regressing this mismatch on a host country's tax haven status, level of financial market development, exchange rate volatility, and affiliate labor productivity. All hypotheses are supported, implying that FDI stocks are a biased measure of MNE affiliate activity, and hence that the results of FDI-data-based studies of such activity need to be reconsidered. [ABSTRACT FROM AUTHOR]

On the Qualitative Comparison of Decisions Having Positive and Negative Features

Making a decision is often a matter of listing and comparing positive and negative arguments. In such cases, the evaluation scale for decisions should be considered bipolar, that is, negative and positive values should be explicitly distinguished. That is what is done, for example, in Cumulative Prospect Theory. However, contrary to the latter framework that presupposes genuine numerical assessments, human agents often decide on the basis of an ordinal ranking of the pros and the cons, and by focusing on the most salient arguments. In other terms, the decision process is qualitative as well as bipolar. In this article, based on a bipolar extension of possibility theory, we define and axiomatically characterize several decision rules tailored for the joint handling of positive and negative arguments in an ordinal setting. The simplest rules can be viewed as extensions of the maximin and maximax criteria to the bipolar case, and consequently suffer from poor decisive power. More decisive rules that refine the former are also proposed. These refinements agree both with principles of efficiency and with the spirit of order-of-magnitude reasoning, that prevails in qualitative decision theory. The most refined decision rule uses leximin rankings of the pros and the cons, and the ideas of counting arguments of equal strength and cancelling pros by cons. It is shown to come down to a special case of Cumulative Prospect Theory, and to subsume the “Take the Best” heuristic studied by cognitive psychologists.

No major schizophrenia locus detected on chromosome 1q in a large multicenter sample

Reports of substantial evidence for genetic linkage of schizophrenia to chromosome 1q were evaluated by genotyping 16 DNA markers across 107 centimorgans of this chromosome in a multicenter sample of 779 informative schizophrenia pedigrees. No significant evidence was observed for such linkage, nor for heterogeneity in allele sharing among the eight individual samples. Separate analyses of European-origin families, recessive models of inheritance, and families with larger numbers of affected cases also failed to produce significant evidence for linkage. If schizophrenia susceptibility genes are present on chromosome 1q, their population-wide genetic effects are likely to be small.

Prevalence of refractive error in Europe: the European Eye Epidemiology (E3) Consortium

To estimate the prevalence of refractive error in adults across Europe. Refractive data (mean spherical equivalent) collected between 1990 and 2013 from fifteen population-based cohort and cross-sectional studies of the European Eye Epidemiology (E³) Consortium were combined in a random effects meta-analysis stratified by 5-year age intervals and gender. Participants were excluded if they were identified as having had cataract surgery, retinal detachment, refractive surgery or other factors that might influence refraction. Estimates of refractive error prevalence were obtained including the following classifications: myopia ≤−0.75 diopters (D), high myopia ≤−6D, hyperopia ≥1D and astigmatism ≥1D. Meta-analysis of refractive error was performed for 61,946 individuals from fifteen studies with median age ranging from 44 to 81 and minimal ethnic variation (98 % European ancestry). The age-standardised prevalences (using the 2010 European Standard Population, limited to those ≥25 and <90 years old) were: myopia 30.6 % [95 % confidence interval (CI) 30.4–30.9], high myopia 2.7 % (95 % CI 2.69–2.73), hyperopia 25.2 % (95 % CI 25.0–25.4) and astigmatism 23.9 % (95 % CI 23.7–24.1). Age-specific estimates revealed a high prevalence of myopia in younger participants [47.2 % (CI 41.8–52.5) in 25–29 years-olds]. Refractive error affects just over a half of European adults. The greatest burden of refractive error is due to myopia, with high prevalence rates in young adults. Using the 2010 European population estimates, we estimate there are 227.2 million people with myopia across Europe.

Increasing Prevalence of Myopia in Europe and the Impact of Education

PURPOSE: To investigate whether myopia is becoming more common across Europe and explore whether increasing education levels, an important environmental risk factor for myopia, might explain any temporal trend.

DESIGN: Meta-analysis of population-based, cross-sectional studies from the European Eye Epidemiology (E(3)) Consortium.

PARTICIPANTS: The E(3) Consortium is a collaborative network of epidemiological studies of common eye diseases in adults across Europe. Refractive data were available for 61 946 participants from 15 population-based studies performed between 1990 and 2013; participants had a range of median ages from 44 to 78 years.

METHODS: Noncycloplegic refraction, year of birth, and highest educational level achieved were obtained for all participants. Myopia was defined as a mean spherical equivalent ≤-0.75 diopters. A random-effects meta-analysis of age-specific myopia prevalence was performed, with sequential analyses stratified by year of birth and highest level of educational attainment.

MAIN OUTCOME MEASURES: Variation in age-specific myopia prevalence for differing years of birth and educational level.

RESULTS: There was a significant cohort effect for increasing myopia prevalence across more recent birth decades; age-standardized myopia prevalence increased from 17.8% (95% confidence interval [CI], 17.6-18.1) to 23.5% (95% CI, 23.2-23.7) in those born between 1910 and 1939 compared with 1940 and 1979 (P = 0.03). Education was significantly associated with myopia; for those completing primary, secondary, and higher education, the age-standardized prevalences were 25.4% (CI, 25.0-25.8), 29.1% (CI, 28.8-29.5), and 36.6% (CI, 36.1-37.2), respectively. Although more recent birth cohorts were more educated, this did not fully explain the cohort effect. Compared with the reference risk of participants born in the 1920s with only primary education, higher education or being born in the 1960s doubled the myopia prevalence ratio-2.43 (CI, 1.26-4.17) and 2.62 (CI, 1.31-5.00), respectively-whereas individuals born in the 1960s and completing higher education had approximately 4 times the reference risk: a prevalence ratio of 3.76 (CI, 2.21-6.57).

CONCLUSIONS: Myopia is becoming more common in Europe; although education levels have increased and are associated with myopia, higher education seems to be an additive rather than explanatory factor. Increasing levels of myopia carry significant clinical and economic implications, with more people at risk of the sight-threatening complications associated with high myopia.

Ophthalmic epidemiology in Europe: the “European Eye Epidemiology” (E3) consortium

The European Eye Epidemiology (E3) consortium is a recently formed consortium of 29 groups from 12 European countries. It already comprises 21 population-based studies and 20 other studies (case-control, cases only, randomized trials), providing ophthalmological data on approximately 170,000 European participants. The aim of the consortium is to promote and sustain collaboration and sharing of data and knowledge in the field of ophthalmic epidemiology in Europe, with particular focus on the harmonization of methods for future research, estimation and projection of frequency and impact of visual outcomes in European populations (including temporal trends and European subregions), identification of risk factors and pathways for eye diseases (lifestyle, vascular and metabolic factors, genetics, epigenetics and biomarkers) and development and validation of prediction models for eye diseases. Coordinating these existing data will allow a detailed study of the risk factors and consequences of eye diseases and visual impairment, including study of international geographical variation which is not possible in individual studies. It is expected that collaborative work on these existing data will provide additional knowledge, despite the fact that the risk factors and the methods for collecting them differ somewhat among the participating studies. Most studies also include biobanks of various biological samples, which will enable identification of biomarkers to detect and predict occurrence and progression of eye diseases. This article outlines the rationale of the consortium, its design and presents a summary of the methodology.