The impact of social and relational contexts on innovation transfer in foreign subsidiaries

It is widely acknowledged that innovation is one of the pillars of multinational enterprises (MNEs) and that technological knowledge from different host locations is a key factor to the MNEs’ competitive advantages development. Concerning these assumptions, in this paper we aim to understand how the social and the relational contexts affect the conventional and reverse transfer of innovation from MNEs’ subsidiaries hosted in emerging markets. We analyzed the social context through the institutional profile (CIP) level and the relational context through trust and integration levels utilizing a survey sent to 172 foreign subsidiaries located in Brazil, as well as secondary data. Through an ordinary least squares regression (OLS) analysis we found that the relational context affects the conventional and reverse innovation transfer in subsidiaries hosted in emerging markets. We however did not find support for the social context effect.

Capital structure choice of foreign subsidiaries: evidence from multinationals in Brazil

Is the capital structure choice of a foreign subsidiary different from the choice of a comparable company controlled by nationals? If so, what are the differences? In this paper we shed some light on these questions by looking at a sample of foreign subsidiaries in Brazil over the period 1985 to 1994. We find that the foreign subsidiaries in our sample are more levered than their Brazilian counterparts. This difference, however, has declined over time. The evidence is consistent with the hypothesis that foreign subsidiaries increase leverage as a hedge against an expropriation of assets in a nationalization process.

The role of market orientation in the business success of the MNC’s foreign subsidiaries

In recent discussions over the contribution of marketing to the strategy dialogue, market orientation has been singled out as being of particular importance in relation to the understanding of competitive advantage (Day et al 1992, Hunt and Lamb 2000). Research in the past has focused primarily on firms operating in domestic markets. As such, despite the recent progress, it is unclear of relevancy of market orientation as a construct in the context of multinational corporations (MNC) and their foreign subsidiaries. In this study, we set out to explore the role of market orientation in the subsidiary business performance. An investigation of a sample of 252 foreign subsidiaries in the UK revealed that except for “receptive? subsidiaries (Taggart 1998), market orientation has significant positive relationships with a number of business performance measures in all three other types of subsidiaries, suggesting that market orientation is a key driver for business performance at foreign subsidiaries.

Patterns of local R&D cooperation of foreign subsidiaries in an intermediate country: innovative and structural factors

We attempt to contribute to a better understanding of cooperative innovation patterns of foreign subsidiaries (FS) in Spain as a representative intermediate country, going deeply into three main aspects: firstly, a sectoral taxonomy which combines international technological dynamism and revealed technological advantage as a way to understand such patterns. Secondly we focus our attention on innovative intensive subsidiaries, assuming they are the most important ones for hosting countries. Thirdly, we combine innovation and structural-competitive variables to explain local cooperation. We found more intense cooperation of FS with local agents in dynamic specialization sectors, as well as the fact that this is mostly carried out in a complementary mode with inner knowledge capabilities of the companies. Cooperative activities are influenced by economicstructural factors of the Spanish economy, particularly in highly innovative companies. Cooperative strategies of domestic firms might also have an influence on those of foreign subsidiaries.

Drivers of human resource management competences development in Brazilian multinational subsidiaries: a multilevel research

This article aims to verify the factors associated with the development of human resource management (HRM) competences in foreign subsidiaries of Brazilian multinationals. These competences are essential in that they allow foreign units to adopt HRM practices that are consistent with the countries or markets in which they operate. A multilevel research was conducted, involving headquarters and subsidiaries of major Brazilian companies; the empirical analysis employed hierarchical linear modelling. Despite the recurrent debate on global standardisation versus local adaptation, it was identified that the integration of international HRM policies (addressing simultaneously global guidelines and local response) may stimulate competences development. In addition, interaction in external networks in the host country may enhance the development of HRM competences in the subsidiaries. However, specific cultural factors of the company may inhibit development activity in units abroad.

Foreign ownership and productivity dynamics

In analyzing the distinctive contribution of foreign subsidiaries anddomestic firms to productivity growth in aggregate Belgian manufacturing,this paper shows that foreign ownership is an important source of firmheterogeneity affecting productivity dynamics. Foreign firms havecontributed disproportionately large to aggregate productivity growth,but more importantly reallocation processes differ significantly betweenthe groups of foreign subsidiaries and domestic firms.

Foreign MNEs and domestic innovative capabilities: are there conditions for reverse spillovers in the spanish industry?

We analyse, over 2004-2008, a sample of approximately 700 foreign subsidiaries and 4,500 domestic firms located in Spain in order to understand the relationship between local R&D cooperation and innovativeness of the firm. Our ultimate objective is to understand whether foreign subsidiaries are likely to make a contribution to local innovative capabilities or if, conversely, they may eventually benefit from conditions for reverse spillovers. Using a variety of specifications for the innovation-related activities of the firm, we find that foreign subsidiaries are more cooperative than the average firm located in Spain, but not necessarily more than affiliated domestic firms (entrepreneurial groups). However, foreign subsidiaries are more cooperative than affiliated domestic firms in sectors considered highly dynamic by international technological standards, whether Spain has a technical advantage in these specific sectors or not. When we focus on companies which are more innovative than the two-digit industries in which they operate, we find that foreign subsidiaries tend to be more cooperative than domestic firms in sectors where Spain displays technological advantage. These sectors comprise traditional industries displaying little innovation dynamism from an international point of view. This finding suggests that there may be conditions for reverse spillovers in these specific Spanish sectors (though measuring them is beyond the objectives of this paper).

Capital markets and the market structure of foreign investments

Contrary to the long-received theory of FDI, interest rates or rates of return can motivate foreign direct investment (FDI) in concert with the benefits of direct ownership. Thus, access to investor capital and capital markets is a vital component of the multinational’s competitive market structure. Moreover, multinationals can use their superior financial capacity as a competitive advantage in exploiting FDI opportunities in dynamic markets. They can also mitigate higher levels of foreign business risks under dynamic conditions by shifting more financial risk to creditors in the host economy. Furthermore, the investor’s expectation of foreign business risk necessarily commands a risk premium for exposing their equity to foreign market risk. Multinationals can modify the profit maximization strategy of their foreign subsidiaries to maximize growth or profits to generate this risk premium. In this context, we investigate how foreign subsidiaries manage their capital funding, business risk, and profit strategies with a diverse sample of 8,000 matched parents and foreign subsidiary accounts from multiple industries in 38 countries.We find that interest rates, asset prices, and expectations in capital markets have a significant effect on the capital movements of foreign subsidiaries. We also find that foreign subsidiaries mitigate their exposure to foreign business risk by modifying their capital structure and debt maturity. Further, we show how the operating strategy of foreign subsidiaries affects their preference for growth or profit maximization. We further show that superior shareholder value, which is a vital link for access to capital for funding foreign expansion in open market economies, is achieved through maintaining stability in the rate of growth and good asset utilization.

The role of market orientation in the business success of MNCs' UK subsidiaries

Purpose - The paper aims to explore the role of market orientation in the multinational company's subsidiary's business performance. Design/methodology/approach - The paper is based on a questionnaire survey/analysis of a sample of 252 foreign subsidiaries in the UK. Findings - The paper finds that market orientation is a key driver for business performance at foreign subsidiaries. However, the strength of its impact on performance depends on the subsidiary role. Originality/value - This is the first systematic investigation of the role of market orientation in multinational companies' subsidiaries.

Earnings overseas and cash holdings

I investigate the impact of foreign pre-tax income on the total amount of cash held by companies and on the amount of cash that is held in companies’ foreign subsidiaries. I also investigate the impact of the existence and amount of cash held on companies’ foreign subsidiaries in the composition of cash holdings in terms of risk and liquidity. Using a sample of 100 largest U.S. non-financial and non-utilities companies I find that companies with higher earnings overseas present higher cash reserves and invest a higher fraction of their cash in risky assets. My evidence suggests that companies have a different optimization strategy for cash overseas, in which precautionary motives are not the main driver for holding cash.

How do global born companies ignite their internationalization and survive in international markets?

Over the last decades, the born global firms or the international new ventures (“INVs”) have assumed a growing role in international business, including in Portugal. The rise of this new type of multinational has challenged several theories concerning the development of multinational companies and the origin of companies’ competitive advantage. This qualitative, case-based research explores the most relevant traits shown by some Portuguese born-global firms. More concretely, the aim of this work is to compare some Portuguese international new ventures in order to understand the role of leadership, culture and strategy in their rapid internationalization and the source of their lasting competitive advantage. It was noticed that these firms’ lasting competitive advantage results from a singular combination of resources and dynamic capabilities that evolves over time. Moreover, it was found that these firms’ foreign subsidiaries and local networks may be essential to enhance the firms competitive advantage as it provides each firm a distinctive source of knowledge and capabilities. As a consequence, the effective assimilation of such resources and capabilities in these firms’ may become crucial for their lasting success. In addition, the leadership, strategy and culture in these firms seem to be quite aligned and form a quite virtuous cycle that contributed to the firms rapid internationalization and for the way the firms developed their own resources and dynamic capabilities and adapted to external environment.

Managing Subsidiary Integration During Corporate Expansion in Russia

Kansallisten rajojen yli laajentuvat yritykset kohtaavat kasvavia paineita yhtenäistää eri yksiköiden toimintatapoja, prosesseja ja järjestelmiä. Hyvin toteutettuna organisaation sisäinen integrointi voi johtaa tytäryritysten tuottavuuden parantumiseen ja strategisiin mittakaavaetuihin, kun taas huonosti toteutettuna integrointi voi johtaa lisääntyviin konflikteihin ja emoyhtiön kontrollin katoamiseen. Integroinnin kannalta Venäjälle perustettavat tytäryritykset asettavat suuria haasteita. Kasvava ja kehittyvä kansantalous on jatkuvassa muutoksessa kohti edistyneempiä ja tuottavampia toimintamalleja, mutta toisaalta yritystoiminnantaustalla vaikuttaa edelleenkin Neuvostoajan perinnöt, jotka muokkaavat yritysten johtamisrakenteita ja prosesseja. Nämä taustavaikuttajat vaikeuttavat kansainvälisen yrityksen yhtenäistämistä, mutta toisaalta tarjoavat suuria mahdollisuuksia yrityksille, jotka oppivat elämään Venäjän markkinoiden ehdoilla. Tämä tutkimus käyttää apunaan konstruktiivista tutkimustyötä ratkoakseenYIT:n Venäjälle perustettavien yritysten integrointiin liittyviä ongelmia ja mahdollisuuksia. Työn lopputuloksena syntyy oppimiseen pohjautuva integraatiostrategia ja tätä strategiaa tukeva integroinnin johtamisjärjestelmä.

Kehittämistarpeet investointihyödykkeitä valmistavassa kansainvälisessä konsernissa. Case: GWS Systems Oy

Tutkielman aiheena on case-yrityksen kansainvälisen liiketoiminnan kehittäminen. Tutkielmassa selvitetään, minkälaisiin toimenpiteisiin case-yrityksen olisi liiketoiminnallisin perustein lähitulevaisuudessa ryhdyttävä sen ulkomaisten myyntiyhtiöiden suhteen vientitoimintaa kehitettäessä. Tarkastelunäkökulma on strategialähtöinen. Johdon päätöksenteon tarpeisiin tähtäävä käsittely painottuu strategian ja laskentatoimen välisen ajankohtaisen vuorovaikutuksen käsittelyyn. Tutkimus on kvalitatiivinen tapaustutkimus. Tutkimusmenetelmä on käytetty osallistuvaa havainnointia sekä haastatteluja. Tutkimuksen tulosten mukaan case-yrityksen tulisi muuttaa vientitoimintamalliaan nykyisestä tytäryhtiömuotoisesta toimintamallista hallinnollisesti ja kustannusrakenteellisesti kevyempään suuntaan. Kannattavuuden parantamiseksi suositellaan lisäksi strategisen johdon laskentatoimen menetelmistä asiakaskannattavuusanalyysin käyttöönottoa myyntiyhtiöiden kannattavimpien asiakkuuksien tunnistamiseksi, jotta niukat resurssit voitaisiin kohdistaa niihin asiakkaisiin, jotka synnyttävät enemmän myyntiä ja parempia tuottoja.

Means and challenges in international operations for a Finnish mobile application provider

Master’s Thesis concentrates to means and challenges in international operations for a Finnish mobile application provider Small Planet Oy during its various company stages from founding till maturing and during macro economical phases between year 1998 and 2008. Small Planet has just celebrated its 10 year anniversary and is therefore quite an extraordinary company which has survived all the highs and lows during past ten years and which has operated in the market as long as the whole mobile application industry has existed. Master’s Thesis describes possibilities for a company’s internationalization with different entry modes like exporting, licensing, investment entry and co-operative operations which are suitable for a mobile application provider. Unsuitable entry modes like franchising or contract manufacturing are not explained. The goal has been to analyze Small Planet’s international operations and to make conclusions from the practical experiences. Analysis and conclusions shall help Small Planet in its international operations in the future and should give insight to other mobile application companies and their managers who are in the situation of planning their own international operations. Results show that the best ways for Small Planet to internationalize its operations has been the co-operation with a big domestic client and the co-operation with Finnish operator infrastructure providers which have complementary products with Small Planet. Through these co-operations Small Planet has got lot of new international clients. Same time financial risks and investment need for international operations have been low. Co-operative international sales can be the most efficient international entry mode for a mobile application provider.

Les sources d'influence des pratiques d'emploi instaurées par les entreprises multinationales originaires des pays européens dans leurs filiales québécoises.

Le but de notre recherche est de répondre à la question suivante : Quelles sont les sources d’influence des pratiques d’emploi instaurées par les EMN originaires de pays européens dans leurs filiales québécoises? Comme les EMN constituent notre objet de recherche, nous avons, dans un premier temps, recensé les principales caractéristiques de celles-ci. Il faut noter que les EMN ont un portrait différent par rapport à celui des entreprises qui ne sont pas multinationales. Comme le Québec est l’endroit où notre recherche a eu lieu, nous avons aussi expliqué les caractéristiques socioéconomiques du marché québécois. Nous avons constaté que le marché québécois se distingue du reste du Canada par son hybridité résultant d’un mélange de caractéristiques libérales et coordonnées. Comme les EMN étudiées sont d’origine européenne, nous avons aussi expliqué les caractéristiques des pays européens à économie coordonnée et libérale. Il faut noter que les pays à économie coordonnée et à économie libérale ont de caractéristiques différentes, voire opposées. Dans un deuxième temps, nous avons recensé les études qui ont tenté de répondre à notre question de recherche. La littérature identifie quatre sources d’influence des pratiques d’emploi que les EMN instaurent dans leurs filiales étrangères : le pays d’accueil, le pays d’origine, les sources d’influence hybrides, et les sources d’influence globales. Les sources d’influence provenant des pays d’accueil déterminent les pratiques d’emploi des filiales étrangères en mettant en valeur l’isomorphisme, les principes calculateur et collaborateur, et la capacité des filiales à modifier les marchés dans lesquels elles opèrent. Les sources d’influence provenant des pays d’origine influencent les pratiques d’emploi en mettant en valeur l’isomorphisme culturel, l’effet du pays d’origine, et l’effet du pays de gestion. Les sources d’influence hybrides combinent les facteurs en provenance des pays d’accueil, des pays d’origine, et du marché global pour déterminer les pratiques d’emploi des filiales étrangères. Finalement, les sources d’influence globales mettent en valeur les pressions d’intégration au marché mondial pour expliquer la convergence des pratiques d’emploi des filiales étrangères vers un modèle universel anglo-saxon. Pour répondre à notre question de recherche, nous avons identifié les niveaux de coordination des pays d’origine comme variable indépendante, et les niveaux de coordination des pratiques d’emploi comme variable dépendante. Sept hypothèses avec leurs indicateurs respectifs ont tenu compte des relations entre nos variables indépendantes et dépendante. Nous avons préparé un questionnaire de recherche, et avons interviewé des membres du personnel de RH de dix EMN européennes ayant au moins une filiale au Québec. Les filiales faisant partie de notre échantillon appartiennent à des EMN originaires de divers pays européens, autant à marché libéral que coordonné. Nous avons décrit en détail les caractéristiques de chacune de ces EMN et de leurs filiales québécoises. Nous avons identifié des facteurs explicatifs (index de coordination de Hall et Gingerich, secteur d’activité, taille des filiales, et degré de globalisation des EMN) qui auraient pu aussi jouer un rôle dans la détermination et la nature des pratiques d’emploi des filiales. En matière de résultats, nous n’avons constaté de lien entre le type de marché du pays d’origine et le degré de coordination des pratiques d’emploi que pour les pratiques salariales; confirmant ainsi notre première hypothèse. Les pratiques de stabilité d’emploi, de formation, et de relations de travail ont un lien avec le secteur d’activité; soit le secteur de la production des bien, ou celui des services. Ainsi, les filiales dans le secteur de la production de biens font preuve de plus de coordination en matière de ces trois pratiques comparativement aux filiales dans le secteur des services. Finalement, les pratiques de développement de carrière et de partage d’information et consultation sont de nature coordonnée dans toutes les filiales, mais aucun facteur explicatif n’explique ce résultat. Compte tenu que le marché d’accueil québécois est commun à toutes les filiales, le Québec comme province d’accueil pourrait expliquer le fort degré de coordination de ces deux pratiques. Outre le marché d’accueil, le caractère multinational des EMN auxquelles ces filiales appartiennent pourrait aussi expliquer des résultats semblables en matière des pratiques d’emploi. Notre recherche comporte des forces et des faiblesses. Concernant les forces, notre méthode de recherche nous a permis d’obtenir des données de source directe, car nous avons questionné directement les gens concernées par les pratiques d’emploi. Ceci a pour effet d’assurer une certaine validité à notre recherche. Concernant nos faiblesses, la nature restreinte de notre échantillon ne nous permet pas de généraliser les résultats. Il faudrait réaliser d’autres recherches pour améliorer la fiabilité. De plus, les pays d’origine des filiales demeure ambigu pour certaines d’entre elles, car celles-ci ont changé de propriétaire plusieurs fois. D’autres ont au moins deux propriétaires originaires de pays distincts.