A fresh look at decision making in international investment choices: Firm international coherence and home-host country relatedness

Understanding how decisions for international investments are made and how this affects the overall pattern of investments and firm’s performance is of particular importance both in strategy and international business research. This dissertation introduced first home-host country relatedness (HHCR) as the degree to which countries are efficiently combined within the investment portfolios of firms. It theorized and demonstrated that HHCR will vary with the motivation for investments along at least two key dimensions: the nature of foreign investments and the connectedness of potential host countries to the rest of the world. Drawing on cognitive psychology and decision-making research, it developed a theory of strategic decision making proposing that strategic solutions are chosen close to a convenient anchor. Building on research on memory imprinting, it also proposed that managers tend to rely on older knowledge representation. In the context of international investment decisions, managers use their home countries as an anchor and are more likely to choose as a site for foreign investments host countries that are ‘close’ to the home country. These decisions are also likely to rely more strongly on closeness to time invariant country factors of historic and geographic nature rather than time-variant institutions. Empirical tests using comprehensive investments data by all public multinational companies (MNC) worldwide, or over 15,000 MNCs with over half a million subsidiaries, support the claims. Finally, the dissertation introduced the concept of International Coherence (IC) defined as the degree to which an MNE’s network comprises countries that are related. It was hypothesized that maintaining a high level of coherence is important for firm performance and will enhance it. Also, the presence of international coherence mitigates some of the negative effects of unrelated product diversification. Empirical tests using data on foreign investments of over 20,000 public firms, while also developing a home-host country relatedness index for up to 24,300 home-host pairs, provided support for the theory advanced.

Could Relatedness Help Explain Why Individuals Lead in Bottlenose Dolphin Groups?

In many species, particular individuals consistently lead group travel. While benefits to followers often are relatively obvious, including access to resources, benefits to leaders are often less obvious. This is especially true for species that feed on patchy mobile resources where all group members may locate prey simultaneously and food intake likely decreases with increasing group size. Leaders in highly complex habitats, however, could provide access to foraging resources for less informed relatives, thereby gaining indirect benefits by helping kin. Recently, leadership has been documented in a population of bottlenose dolphins (Tursiops truncatus) where direct benefits to leaders appear unlikely. To test whether leaders could benefit indirectly we examined relatedness between leader-follower pairs and compared these levels to pairs who associated but did not have leader-follower relationship (neither ever led the other). We found the average relatedness value for leader-follower pairs was greater than expected based on chance. The same was not found when examining non leader-follower pairs. Additionally, relatedness for leader-follower pairs was positively correlated with association index values, but no correlation was found for this measure in non leader-follower pairs. Interestingly, haplotypes were not frequently shared between leader-follower pairs (25%). Together, these results suggest that bottlenose dolphin leaders have the opportunity to gain indirect benefits by leading relatives. These findings provide a potential mechanism for the maintenance of leadership in a highly dynamic fission-fusion population with few obvious direct benefits to leaders.

Development of microsatellite markers in Cannabis Sativa for fingerprinting and genetic relatedness analyses

Microsatellite markers were developed for Cannabis sativa L. (marijuana) to estimate the level of polymorphism, usefulness for DNA typing (genotype identification), and to measure the genetic relationships between the different plants. Twelve different oligonucleotide probes were used to screen an enriched microsatellite library of Cannabis sativa in which 49% of the clones contained microsatellite sequences. Characterization of microsatellite loci in Cannabis revealed that GA/CT was the most abundant class of isolated microsatellites representing 50% overall. Eleven polymorphic SSR markers were developed, derived from dinucleotide motifs and eight from trinucleotide motifs. A total of 52 alleles were detected averaging 4.7 alleles/locus. The expected heterozygosity of the eleven loci ranged between 0.368 and 0.710 and the common probability of identical genotypes was 1.8 x 107. The loci identified 27 unique profiles of the 41 Cannabis samples. The eleven microsatellite markers developed in this study were found to be useful for DNA fingerprinting and for assessing genetic relationships in Cannabis.

Mitochondrial inheritance during a parasexual cycle in {\it Fusarium oxysporum\/} forma specialis {\it cubense\/}

Fusarium oxysporum is a diverse, asexual fungal species composed of both saprophytic and pathogenic members. The destructive phytopathogens are classified into formae speciales based on the host species and into vegetative compatibility groups (VCGs) based on the ability of two individuals to form heterokaryons. Parasexuality, a non-sexual mode of genetic exchange unique to some fungi has been demonstrated in the laboratory in Fusarium oxysporum f. sp. cubense (FOC). The goals of this dissertation were threefold: to ascertain whether mitochondrial (mt) markers can distinguish race differences in FOC; to determine genetic relatedness of VCGs in FOC based on a mt marker; and to discover the mode of mt inheritance during a parasexual cycle.^ Band patterns produced by electrophoresis of Hae III digested genomic DNA indicated that VCG differences, not race, could be discerned by mtDNA analysis. Primers were designed to amplify a mt intergenic locus which served as a molecular marker to screen 55 strains of FOC in 16 VCGs using both single strand conformational polymorphism and DNA sequencing. Based on homogeneity of the locus, strains were assigned to seven mitotypes, a classification unit which I introduced and found informative for grouping related VCGs.^ To determine the mode of mt inheritance during a parasexual cycle, strains in different mitotypes were paired. Mitochondrial inheritance in all hybrid progeny was found to be uniparental. I speculated that if a parasexual cycle occurs in nature there would be greater variation in the nuclear genome than the mt. This could produce multiple VCGs within a mitotype, a phenomenon observed in FOC. Based on these data, I concluded that parasexuality in nature may contribute to the diversity observed in Fusarium oxysporum. ^

Horizontal genetic transfer in asexual fungi

Four aspects of horizontal genetic transfer during heterokaryon formation were examined in the asexual pathogen Fusarium oxysporum f.sp. cubense (Foc): (1) variability based on method of heterokaryon formation; (2) differences in nuclear and mitochondrial inheritance; (3) the occurrence of recombination without nuclear fusion; (4) the occurrence of horizontal genetic transfer between distantly related isolates. The use of non-pathogenic strains of Fusarium oxysporum as biocontrol agents warrants a closer examination at the reproductive life cycle of this fungus, particularly if drug resistance or pathogenicity genes can be transmitted horizontally. Experiments were divided into three phases. Phase I looked at heterokaryon formation by hyphal anastomosis and protoplast fusion. Phase II was a time course of heterokaryon formation to look at patterns of nuclear and mitochondrial inheritance. Phase III examined the genetic relatedness of the different vegetative compatibility groups using a multilocus analysis approach. Heterokaryon formation was evident within and between vegetative compatibility groups. Observation of non-parental genotypes after heterokaryon formation confirmed that, although a rare event, horizontal genetic transfer occurred during heterokaryon formation. Uniparental mitochondria inheritance was observed in heterokaryons formed either by hyphal anastomosis or protoplast fusion. Drug resistance was expressed during heterokaryon formation, even across greater genetic distances than those distances imposed by vegetative compatibility. Phylogenies inferred from different molecular markers were incongruent at a significant level, challenging the clonal origins of Foc. Mating type genes were identified in this asexual pathogen Polymorphisms were detected within a Vegetative Compatibility Group (VCG) suggesting non-clonal inheritance and/or sexual recombination in Foc. This research was funded in part by a NIH-NIGMS (National Institutes of Health-National Institute of General Medical Sciences) Grant through the MBRS (Minority Biomedical Research Support), the Department of Biological Sciences and the Tropical Biology Program at FIU. ^

Essays on firm behavior and firm performance

This dissertation comprises three individual chapters in an effort to examine different explanatory variables that affect firm performance. Chapter Two proposes an additional determinant of firm survival. Based on a detailed examination of firm survival in the British automobile industry between 1895 and 1970, we conclude that a firm's selection of submarket (defined by quality level) influenced survival. In contrast to findings for the US automobile industry, there is no evidence of first-mover advantage in the market as a whole. However, we do find evidence of first-mover advantage after conditioning on submarket choice. Chapter Three examines the effects of product line expansion on firm performance in terms of survival time. Based on a detailed examination of firm survival time in the British automobile industry between 1895 and 1970, we find that diversification exerts a positive effect on firm survival. Furthermore, our findings support the literature with respect to the impacts of submarket types, pre-entry experience, and timing of entry on firm survival time. Chapter Four examines corporate diversification in U.S. manufacturing and service firms. We develop measures of how related a firm's diverse activities are using input-output data and the NAILS classification to construct indexes of "vertical relatedness" and "complementarity". Strong relationships between these two measures are found. We utilize profitability and excess value as the measure for firm performance. Econometric analysis reveals that there is no relationship between the degree of relatedness of diversification and firm performance for the study period.

Interdependencies in corporate development: Relationship between strategic alliance and acquisition activities

A substantial amount of work in the field of strategic management has attempted to explain the antecedents and outcomes of organizational learning. Though multinational corporations simultaneously engage in various types of tasks, activities, and strategies on a regular basis, the transfer of organizational learning in a multi-task context has largely remained under-explored in the literature. To inform our understanding in this area, this dissertation aimed at synthesizing findings from two parallel research streams of corporate development activities: strategic alliances and acquisitions. Structured in the form of two empirical studies, this dissertation examines: 1) the strategic outcomes of alliance experience of previously allying partners in terms of subsequent acquisition attempts, and 2) the performance implications of prior alliance experience for acquisitions. The first study draws on the relational view of inter-organizational governance to explain how various deal-specific and dyadic characteristics of a partnership relate to partnering firms' post-alliance acquisition attempts. This model theorizes on a variety of relational mechanisms to build a cohesive theory of inter-organizational exchanges in a multi-task setting where strategic alliances ultimately lead to a firm's decision to commit further resources. The second study applies organizational learning theory, and specifically examines whether frequency, recency, and relatedness of different dimensions of prior alliances, beyond the dyad-level experience, relate to an acquirer's superior post-acquisition performance. The hypotheses of the studies are tested using logistic and ordinary least square regressions, respectively. Results analyzed from a sample of cross-border alliance and acquisition deals attempted (for study I) and/or completed (for study II) during the period of 1991 to 2011 generally support the theory that relational exchange determines acquiring firms' post alliance acquisition behavior and that organizational routines and learning from prior alliances influence a future acquirer's financial performance. Overall, the empirical findings support our overarching theory of interdependency, and confirm the transfer effect of learning across these alternate, yet related corporate strategies of alliance and acquisition.^

Strategic positioning of Taiwan in the outsourcing market: Evidence from information technology services and electronic manufacturing outsourcing to China

In outsourcing relationships with China, the Electronic Manufacturing (EM) and Information Technology Services (ITS) industry in Taiwan may possess such advantages as the continuing growth of its production value, complete manufacturing supply chain, low production cost and a large-scale Chinese market, and language and culture similarity compared to outsourcing to other countries. Nevertheless, the Council for Economic Planning and Development of Executive Yuan (CEPD) found that Taiwan's IT services outsourcing to China is subject to certain constraints and might not be as successful as the EM outsourcing (Aggarwal, 2003; CEPD, 2004a; CIER, 2003; Einhorn and Kriplani, 2003; Kumar and Zhu, 2006; Li and Gao, 2003; MIC, 2006). Some studies examined this issue, but failed to (1) provide statistical evidence about lower prevalence rates of IT services outsourcing, and (2) clearly explain the lower prevalence rates of IT services outsourcing by identifying similarities and differences between both types of outsourcing contexts. This research seeks to fill that gap and possibly provide potential strategic guidelines to ITS firms in Taiwan. This study adopts Transaction Cost Economics (TCE) as the theoretical basis. The basic premise is that different types of outsourcing activities may incur differing transaction costs and realize varying degrees of outsourcing success due to differential attributes of the transactions in the outsourcing process. Using primary data gathered from questionnaire surveys of ninety two firms, the results from exploratory analysis and binary logistic regression indicated that (1) when outsourcing to China, Taiwanese firms' ITS outsourcing tends to have higher level of asset specificity, uncertainty and technical skills relative to EM outsourcing, and these features indirectly reduce firms' outsourcing prevalence rates via their direct positive impacts on transaction costs; (2) Taiwanese firms' ITS outsourcing tends to have lower level of transaction structurability relative to EM outsourcing, and this feature indirectly increases firms' outsourcing prevalence rates via its direct negative impacts on transaction costs; (3) frequency does influence firms' transaction costs in ITS outsourcing positively, but does not bring impacts into their outsourcing prevalence rates, (4) relatedness does influence firms' transaction costs positively and prevalence rates negatively in ITS outsourcing, but its impacts on the prevalence rates are not caused by the mediation effects of transaction costs, and (5) firm size of outsourcing provider does not affect firms' transaction costs, but does affect their outsourcing prevalence rates in ITS outsourcing directly and positively. Using primary data gathered from face-to-face interviews of executives from seven firms, the results from inductive analysis indicated that (1) IT services outsourcing has lower prevalence rates than EM outsourcing, and (2) this result is mainly attributed to Taiwan's core competence in manufacturing and management and higher overall transaction costs of IT services outsourcing. Specifically, there is not much difference between both types of outsourcing context in the transaction characteristics of reputation and most aspects of overall comparison. Although there are some differences in the feature of firm size of the outsourcing provider, the difference doesn't cause apparent impacts on firms' overall transaction costs. The medium or above medium difference in the transaction characteristics of asset specificity, uncertainty, frequency, technical skills, transaction structurability, and relatedness has caused higher overall transaction costs for IT services outsourcing. This higher cost might cause lower prevalence rates for ITS outsourcing relative to EM outsourcing. Overall, the interview results are consistent with the statistical analyses and provide support to my expectation that in outsourcing to China, Taiwan's electronic manufacturing firms do have lower prevalence rates of IT services outsourcing relative to EM outsourcing due to higher transaction costs caused by certain attributes. To solve this problem, firms' management should aim at identifying alternative strategies and strive to reduce their overall transaction costs of IT services outsourcing by initiating appropriate strategies which fit their environment and needs.

Interdependencies in Corporate Development: Relationship between Strategic Alliance and Acquisition Activities

A substantial amount of work in the field of strategic management has attempted to explain the antecedents and outcomes of organizational learning. Though multinational corporations simultaneously engage in various types of tasks, activities, and strategies on a regular basis, the transfer of organizational learning in a multi-task context has largely remained under-explored in the literature. To inform our understanding in this area, this dissertation aimed at synthesizing findings from two parallel research streams of corporate development activities: strategic alliances and acquisitions. Structured in the form of two empirical studies, this dissertation examines: 1) the strategic outcomes of alliance experience of previously allying partners in terms of subsequent acquisition attempts, and 2) the performance implications of prior alliance experience for acquisitions. The first study draws on the relational view of inter-organizational governance to explain how various deal-specific and dyadic characteristics of a partnership relate to partnering firms’ post-alliance acquisition attempts. This model theorizes on a variety of relational mechanisms to build a cohesive theory of inter-organizational exchanges in a multi-task setting where strategic alliances ultimately lead to a firm’s decision to commit further resources. The second study applies organizational learning theory, and specifically examines whether frequency, recency, and relatedness of different dimensions of prior alliances, beyond the dyad-level experience, relate to an acquirer’s superior post-acquisition performance. The hypotheses of the studies are tested using logistic and ordinary least square regressions, respectively. Results analyzed from a sample of cross-border alliance and acquisition deals attempted (for study I) and/or completed (for study II) during the period of 1991 to 2011 generally support the theory that relational exchange determines acquiring firms’ post alliance acquisition behavior and that organizational routines and learning from prior alliances influence a future acquirer’s financial performance. Overall, the empirical findings support our overarching theory of interdependency, and confirm the transfer effect of learning across these alternate, yet related corporate strategies of alliance and acquisition.