Diversity between and within varieties of capitalism: transnational survey evidence

One of the central debates in contemporary socio-economics concerns the relationship between institutions and firm-level practices and the persistence of a number of alternative viable models for economic development. We examine diversity within and between specific types of capitalism using data from a transnational survey incorporating 14 organizational level practices in a sample of six capitalist archetypes, constituting 27 countries and some 6503 firms. We focus on one of the key-defining features of different varieties of capitalism, the interdependence of employers and employees. We find that there are clustering tendencies, consistent with the literature, but also considerable diversity within as well as between the varieties, although we did not find “diffuse diversity” or homogeneity. The analysis supports a complex and nuanced relationship within and between varieties of capitalism that has not been previously captured in the literature.

CSR: the co-evolution of grocery multiples in the UK (2005-2010)

Purpose – The purpose of this paper is to investigate if CSR is balanced between firm and wider society interests. Design/methodology/approach – A qualitative interpretive hermeneutic approach is used to analyse a variety of publically published secondary sources on the CSR of Tesco, Sainsburys, Morrisons and Co-operative in the UK grocery multiple sector (2005-2010). Findings – CSR strategic outcomes currently favour the firm more than society interests. A multilayered framework in the form of Social Responsibility of the Corporation (SRC) is designed and offered in support of balancing the business-society relationship more evenly. Research limitations/implications – This study is limited to firms originating from within the UK grocery multiple sector. Asda could not be included in the study as it does not publish CSR reports annually in the UK after becoming part of Walmart group. Practical implications – A framework for multi-level standardised definition of CSR in the form of SRC is offered. The inclusion of employees and members of the public on CSR/SRC boards is recommended to foster wider collaboration. The SRC framework promotes standardisation at global level while respecting diversity and firm heterogeneity at firm level. The findings may further contribute to GRI; UN Global Compact; WEF dialogues. Social implications – Recommendations are made to extend CSR board diversity for improved dialogue with communities. The SRC framework may be applied at global; national; industry and firm level. The framework can be applied internationally or locally. Future studies may offer quantitative attributes for balancing CSR/SRC. Originality/value – A globally unique and universally applicable framework for evaluating CSR activities is proposed. Future studies may extend the authors' framework to other industries, national environments or globally in the pursuit of balance between firm and society. Furthermore, firms may also adopt the framework to support CSR activities.

Mergers and acquisitions: driving the growth of MNEs

This paper examines the effects of internationalization (international diversification) and diversification across industries (product diversification) through mergers and acquisitions (M&As) on the firm’s risk-return profile. Drawing on the theoretical work of Vachani (1991) and Rugman and Verbeke’s (2004) metrics, we classify firms according to their degree of product diversification and global reach. These two dimensions at the firm-level are moderators for the performance–expansion relationship. To account for the endogeneity of market entry decisions, we develop a panel vector autoregression. We show that global and host-triad multinational enterprises (MNEs) benefit from cross-border M&As, which reinforces their geographic footprint. In contrast to all other types of firms, home-triad firms exhibit higher firm value without a change in risk when conducting cross-industry M&As. This effect, however, depends on the degree of product diversification. For home-triad firms with a small product range engaging in cross- industry transactions is a value-enhancing growth strategy.

Corporate strategic responses to foreign entry: insights from prospect theory

Purpose – The purpose of this paper is to address how firms adapt their product and geographic diversification as a response to foreign rivals penetrating their domestic market by adopting a behavioral perspective to understand firm-level strategic responses to foreign entry. Design/methodology/approach – The study proposes that strategic responses to foreign entry selected by domestic incumbents have both a framing component and a related, strategic choice component, with the latter including changes in product and geographic market diversification (though other more business strategy-related responses are also possible, e.g. in product pricing and marketing). This study tests a set of hypotheses building on panel data of large US firms. Findings – The study finds, in accordance with our predictions, that domestic incumbents reduce their product and geographic diversification when facing an increase in import penetration. However, when increased market penetration by foreign firms takes the form of FDI rather than imports, the corporate response appears to be an increase in product and geographic diversification, again in line with our predictions. Originality/value – The study develops a new conceptual framework that is grounded in prospect theory, but builds on recent insights from mainstream international strategic management studies (Bowen and Wiersema, 2005; Wiersema and Bowen, 2008).

The future of stakeholder management theory: a temporal perspective

We propose adding a temporal dimension to stakeholder management theory, and assess the implications thereof for firm-level competitive advantage. We argue that a firm’s competitive advantage fundamentally depends on its capacity for stakeholder management related, transformational adaptation over time. Our new temporal stakeholder management approach builds upon insights from both the resource-based view (RBV) in strategic management and institutional theory. Stakeholder agendas and their relative salience to the firm evolve over time, a phenomenon well understood in the literature, and requiring what we call level 1 adaptation. However, the dominant direction of stakeholder pressures can also change, namely, from supporting resource heterogeneity at the firm level to fostering industry homogeneity, and vice versa. When dominant stakeholder pressures shift from supporting heterogeneity towards stimulating homogeneity in industry, the firm must engage in level 2 or transformational adaptation. Stakeholders typically provide valuable resources to the firm in an early stage. Without these resources, which foster heterogeneity (in line with RBV thinking), the firm would not exist. At a later stage, stakeholders also contribute to inter-firm homogeneity via isomorphism pressures (in line with institutional theory thinking). Adding a temporal dimension to stakeholder management theory has far reaching implications for this theory’s practical relevance to senior level management in business.

The effects of corporate and country sustainability characteristics on the cost of debt: an international investigation

We investigate the relationship between corporate and country sustainability on the cost of bank loans. We look into 470 loan agreements signed between 2005 and 2012 with borrowers based in 28 different countries across the world and operating in all major industries. Our principal findings reveal that country sustainability, relating to both social and environmental frameworks, has a statistically and economically impactful effect on direct financing of economic activity. An increase of one unit in a country's sustainability score is associated with an average decrease in the cost of debt by 64 basis points. Our international analysis shows that the environmental dimension of a country's institutional framework is approximately twice as impactful as the social dimension, when it comes to determining the cost of corporate loans. On the other hand, we find no conclusive evidence that firm-level sustainability influences the interest rates charged to borrowing firms by banks. Our main findings survive a battery of robustness tests and additional analyses concerning subsamples, alternative sustainability metrics and the effects of financial crisis.

The evolution and heterogeneity of outward foreign direct investment from Latin America

The PhD dissertation investigates the rise of emerging country multinationals (EMNEs), a phenomenon that has opened up a series of research themes and debates. The main debate in this field is the extent to which the theories/frameworks on foreign direct investment (FDI), which have been developed from investigations on multinationals from developed countries, is relevant in explaining outward FDI from EMNEs. This debate is sparked by research suggesting that EMNEs supposedly do not hold the characteristics that are seen as a prerequisite to engaging in FDI. The underlying theme in this PhD is that the field should move away from a one size fit all categorisation of EMNEs, and explore the heterogeneity within EMNEs. Collecting data through various databases, archival articles and annual reports, there was an examination of the internationalisation process of 136 Latin American Multinationals (LAMNEs). The research explores the differences in internationalisation trajectories and global strategies and classifies firms into one of four categories. The four categories that LAMNEs fall into are: Natural-Resource Vertical Integrator, which are firms that are in resource seeking sectors; Accelerated Global, which depict firms that have become global over a very short period of time; Traditional Global, which are EMNEs that have internationalised at the same pace as developed country MNEs and Local Optimisers that only acquire or internationalise to developing countries. The analysis also looks at which decade LAMNEs engaged in FDI, to see if LAMNEs that internationalised during the 1970s and 1980s, during a time when Latin America had a closed economy, was different to LAMNEs that internationalised during the Washington consensus era of the 1990s or to firms that have only just internationalised within the last decade. The findings show that LAMNEs that internationalised before 1990 were more likely to adopt Local Optimiser strategies. However, more LAMNEs that started to internationalise during the 1990s started to adopt Traditional Global strategies, although Local Optimisers were the most prominent strategy. From 2002, there was more prominence of Accelerated Global strategies and a lot more heterogeneity among LAMNEs. Natural-Resource Vertical Integrator LAMNEs, tended to start to internationalisation process during the 1970s/1980s. Despite the rise of EMNEs, and by extension LAMNEs opting to use cross border merger and acquisitions (M&A), there is little research on whether this entry mode has been successful. Contrary to the argument that EMNEs are “internationalising successfully” through this strategy, the findings show that these firms are highly geared and are running less efficiently against their Western competitors. In comparison, LAMNEs internationalising through a more gradual approach, are outperforming their Western competitors on efficiency and are not highly geared- i.e. do not hold a lot of debt. The conclusion of the thesis is the emphasis of moving away from evaluating firms from their country or region of origin, but rather through the global strategy they are using. This will give a more a robust firm level of analysis, and help develop the understanding of EMNEs and international business theory.

Institutional legacies and capabilities: work practices and employment relations in Portugal and Mozambique

This is a study of institutional change and continuity, comparing the trajectories followed by Mozambique and its formal colonial power Portugal in HRM, based on two surveys of firm level practices. The colonial power sought to extend the institutions of the metropole in the closing years of its rule, and despite all the adjustments and shocks that have accompanied Mozambique’s post-independence years, the country continues to retain institutional features and associated practices from the past. This suggests that there is a post-colonial impact on human resource management. The implications for HRM theory are that ambitious attempts at institutional substitution may have less dramatic effects than is commonly assumed. Indeed, we encountered remarkable similarities between the two countries in HRM practices, implying that features of supposedly fluid or less mature institutional frameworks (whether in Africa or the Mediterranean world) may be sustained for protracted periods of time, pressures to reform notwithstanding. This highlights the complexities of continuities which transcend formal rules; as post-colonial theories alert us, informal conventions and embedded discourse may result in the persistence of informal power and subordination, despite political and legal changes.

Internalization theory: an unfinished agenda

Internalization theory is usually applied at the firm level to analyse FDI, licensing and subcontracting, but this paper extends it to the industry level. It synthesises internalisation theory and oligopoly theory. It analyses a global industry where firms innovate competitively, and freely enter and exit the industry. It presents a formal model which highlights the inter-dependencies between rival firms. Each firm responds to its rivals by jointly optimising production and innovation through inter-dependent ownership and location decisions. The competitive outcome determines which firms serve which markets, which firms enter or exit the industry, and the internalisation strategy of each firm.

Farm-level economic performance of genetically modified cotton in Maharashtra, India

A study of the commercial growing of Bacillus flutringiensis (Bt) cotton in India, compares the performance of over 9,000 Bt and non-Bt cotton farm plots in Maharashtra over the 2002 and 2003 seasons. Results show that since their commercial release in 2002, Bt cotton varieties have had a significant positive impact on average yields and on the economic performance of cotton growers. Regional variation showed that, in a very few areas, not all farmers had benefited from increased performance of Bt varieties.

Farm-level economic performance of genetically modified cotton in Maharashtra, India

A study of the commercial growing of Bacillus flutringiensis (Bt) cotton in India, compares the performance of over 9,000 Bt and non-Bt cotton farm plots in Maharashtra over the 2002 and 2003 seasons. Results show that since their commercial release in 2002, Bt cotton varieties have had a significant positive impact on average yields and on the economic performance of cotton growers. Regional variation showed that, in a very few areas, not all farmers had benefited from increased performance of Bt varieties.