Localized learning by emerging multinational enterprises in developed host countries: a fuzzy-set analysis of Chinese foreign direct investment in Australia

Firms learn general international management and foreign market specific knowledge in their internationalization process. Firms' strategic emphasis on generalized vs. localized learning is an important yet underexplored issue in the extant literature. Drawing on the theoretical framework of dynamic capability, and in the context of emerging multinational enterprises' FDI into developed host countries, this study examines the equifinal process-position-path configurations of firms that will motivate them to engage in localized learning (as opposed to generalized learning). Utilizing primary and secondary data of eleven Chinese foreign direct investments in Australia, collected at both headquarters and subsidiary levels, we conducted fuzzy-set qualitative comparative analysis (fsQCA) that provided substantial support to our propositions. This study contributes to the internationalization process model by identifying equifinal process-position-path configurations, as well as their core and peripheral conditions that motivate localized learning at both the headquarters and the subsidiary levels.

Foreign direct investment and economic growth: A real relationship or wishful thinking?

Several theories have been advanced on the beneficial effect of foreign direct investment (FDI) on economic growth. However, mixed empirical findings have resulted in a long-standing debate. This study explores the global FDI-growth relationship through an 'informed' econometric analysis predicated on substantial guidance obtained from a detailed investigation of 880 estimates reported in 108 published studies. With model uncertainties alleviated and the core specification benchmarked against the aforementioned assessment, our econometric analysis, utilising a global sample of 140 countries in the period 1970 to 2009, conclusively documents that FDI positively affects economic growth. Moreover, we find that this association holds globally as strongly as in the developing world. Further, it is regional variation rather than within-country variation, and contemporaneous FDI rather than past FDI, which matters for growth. Finally, appropriate absorptive capacity indicators for positive growth are identified to be trade openness and financial development rather than schooling.

The foreign direct investment-economic growth nexus

The nexus between foreign direct investment (FDI) and economic growth has been a long-standing debate from mixed empirical findings. There is also a possibility of a bi-directional relationship between FDI and economic growth. This paper investigates FDI- growth associations using a simultaneous system of equations approach of 124 cross-country data for the period 1971- 2010. Results from the estimation indicate that overall effects of FDI are positively associated with growth and vice versa; whereas labor force, trade openness and economic freedom are other key determinants of FDI, which in turn stimulate income growth further.

The saving and investment nexus for China : evidence from cointegration tests

The saving and investment nexus as postulated by Feldstein and Horioka (FH) (1980) is revisited. The saving investment correlation for China is estimated over the periods 1952-1998 and 1952-1994, the latter culminating in a period of fixed exchange rate regime. Amongst the key results, it is found that saving and investment are correlated for China for both the period of the fixed exchange rate and the entire sample period. With high saving-investment correlation, the results suggest that the Chinese economy is in conformity with the FH hypothesis. This is a valid outcome, for in China capital mobility was fairly restricted over the 1952-1994 period as indicated by the relatively low foreign direct investment.

Globalisation and manufacturing strategy in the TCF industry

Purpose – The textiles, clothing, and footwear (TCF) industry has struggled in Australia since the government commenced dismantling tariffs. By sourcing from Asia, middlemen undercut established suppliers, and retail chains set benchmark low prices with their imported “house” labels. The policy-makers predicted that local producers would become more efficient, and export to make up for lost sales, but the media paints a picture of rising imports, retrenchments, and factory closures. The research objective was to discover what strategies the survivors (actually) employ in adapting to the pressures of globalisation.

Design/methodology/approach – More than 30 companies were involved in the study, ranging from small family businesses to subsidiaries of big multinationals. Each case study was based on an interview with a senior executive, normally followed by a plant tour. This methodology suits a fresh topic, as it avoids preconceptions and imposes no bounds.

Findings – Results show that the policy change was based on “pie in the sky” forecasts. Increasingly, TCF production is transferred to cheap offshore locations, generally via subcontracting plus the “badging” of foreign designs. To survive, local factories should focus on quality and customer service, preferably in niche markets (like uniforms), or for specific customer groups, and develop technologically advanced products. A move down the supply chain into retailing can also assist. Large multinational corporations that engage in foreign direct investment dominate the management literature.

Originality/value – This paper presents a different perspective, neglected in international operations management, whereby domestically oriented businesses attempt to defend themselves against the adverse consequences of globalisation.

The development impact of remittances to Nicaragua

Workers' remittances represent a resource flow from rich to poor countries. The global value of remittances has risen sharply to over US$100 billion a year. This represents the second largest external income source for developing countries behind foreign direct investment (FDI), and far outstrips official development assistance (ODA) (Orozco 2003a). Remittances to developing countries are becoming increasingly important as other sources of external income decline. The impact of remittances on development, however, is inadequately reflected in the literature. Latin America and the Caribbean (LAC) is the world's largest remittance-receiving region. With 9 per cent of the world's population, the region receives approximately 32 per cent of the world's remittances. It is appreciably greater than tourist revenues in many countries, and in five countries in this region, remittances account for over 10 per cent of GNP (World Bank 2003). Within LAC, Nicaragua stands out from other countries. While the US dollar value of remittances to Nicaragua, estimated at US$610 million in 2001, is quite modest compared with the US$10 billion flowing into Mexico, for example, the relative volume of this resource compared with other income flows, and the potential for the country's development, makes Nicaragua's case exceptional. Representing almost 24 per cent of its GNP, remittances to Nicaragua have a significant social and economic impact. The value of known remittances is greater than total export earnings, on a par with the country's ODA, and almost five times that of FDI. As such, remittances currently represent the second largest single resource flow into the country. This is a recent phenomenon.

A resource-based view on China strategy

The research suggests that Chinese companies do not subscribe to ‘western’ strategy theory. As they rapidly internationalise through massive Foreign Direct Investment, Chinese companies are developing new perspectives on achieving competitiveness. A comparison of the Resource-Based View of strategy (RBV) constructs from western literature with identified (indigent) Chinese business strategies found that competitive advantage (CA) was derived from an adherence to the Confucian doctrines. This adherence to Confucian doctrines produced constructs common to both Western and Chinese business strategies. The most successful companies in China actually combined eastern and western strategic approaches, but focussed on the development of relationships to create and maintain CA, instead of focussing on the development of actual resources as recommended by the RBV.

Biopharmaceutical innovation and industrial developments in South Korea, Singapore and Taiwan

South Korea, Singapore and Taiwan are well known as export-oriented developmental states which for decades employed industrial policy to target particular industries for government support. In the past fifteen years, these three countries all identified the biopharmaceutical industry as a strategic sector. This article explores, through economic analysis, the rationale for this decision and the strategies chosen for linking into the global bio-economy with the objective of catching up in biopharmaceuticals. The paper identifies three comparative advantages enjoyed by these countries in the biopharma sector: (1) public investments in basic research; (2) private investments in phase 1 clinical trials; and (3) a potentially significant contract research industry managing latter-stage clinical trials. Governments employ a range of industrial policies, consistent with these comparative advantages, to promote the biopharmaceutical industry, including public investment in biomedical hubs, research funding and research and development (R&D) tax credits. We argue that the most important feature of the biopharmaceutical industry in these countries is the dominant role of the public sector. That these countries have made progress in innovative capabilities is illustrated by input measures such as R&D expenditure as share of gross domestic product, number of patents granted and clinical trials, and volume of foreign direct investment. In contrast, output indicators such as approval of new chemical entities suggest that the process of catching up has only just commenced. Pharmaceutical innovation is at the stage of mainly generating inputs to integrated processes controlled by the globally incumbent firms.

An exploration of the staffing choices, recruitment, skills shortages and retention issues of Australian based multinational corporations in China

The purpose of this paper is to explore the staffing choices, recruitment, skills shortages and retention issues that Australian based multinational corporations (MNCs) in China face. A qualitative research methodology was utilised, where 20 case study organisations were investigated. The firms investigated were all Australian owned and headquartered, and utilised Foreign Direct Investment and Joint Venture modes. It was found that Australian MNCs used an ethnocentric staffing model; they had issues with recruiting willing expatriate staff, and difficulties in finding skilled, qualified local nationals. They experienced significant skills shortages problems, and also reported retention issues. A number of strategies to improve these issues were articulated throughout the paper.

Intra-ASEAN FDI : trend, determinants and analytical issues

One of the significant economic developments in the Asia Pacific region during the 1980's has been the phenomenal increase in intra-ASEAN foreign direct investment (FDI) flows. There are two types of intra-ASEAN FDI flows : out-sourcing and the opportunity to gain access to the host country's modern infrastructural and information network.

Determinants of intra-ASEAN exports and imports

Analyses the factors which explain the behaviour of intro-ASEAN exports and imports including the real exchange rate, real income, the industrial production capacity, and other factors; namely foreign direct investment and industrialisation policies, regionalism and emerging new markets.

Achieving growth in the Pacific islands : an introduction

The Small Island Developing States (SIDS)1 in the Pacific, spread out over an area of 30 million square kilometres of ocean, and home to over 9 million people, face a complex and unique set of development challenges. As small, highly open economies they are particularly susceptible to external shocks, including fluctuations in import prices and export earnings in particular. Remoteness from major ports and export markets, low levels of connectivity with the outside world and susceptibility to natural hazards further complicate matters and have resulted in the Pacific islands being amongst the most vulnerable economies in the world. In spite of their increasing integration into global markets, most face further challenges owing to very limited absorptive capacities, limited resources, inadequate technology, lack of infrastructure and poor economic management and institutional capabilities. As a consequence, economic growth and related outcomes in most remain heavily reliant on external resources, typically including at least one of aid, migrant remittances, and foreign direct investment (FDI) (AusAID 2008 and McGillivray et al. 2008). The particular constraints and growth challenges of Pacific SIDS are too often overlooked in the development research literature. Moreover, the policy debate on how to promote and achieve growth in the Pacific islands can benefit from a deeper understanding of the nature and consequences of these often unique, combination of constraints. This Focus is devoted to development challenges facing these islands, specifically relating to the achievement of economic growth, and draws on five papers that were presented or tabled at the World Institute for Development Economics Research (WIDER) ‘Fragility and Development’ research project meeting held in Fiji in December 2006.