Search results

The purpose of this perspective paper is to answer the question of why some multinational corporations (MNCs) do not evolve and fail to avoid retrogression by natural selection in international business (IB) and to introduce eight papers selected for this special issue.

The authors conceptually discuss the reasons for MNC failure by illustrating key motivations behind foreign direct investment (FDI) undertaken by MNCs based on internalization theory, the OLI paradigm and the OILL (i.e. OLI plus the learning motivation) paradigm. Then, the authors develop an evolutionary perspective to explore the survival of the fittest in the global markets and the natural selection of MNCs.

The eight papers selected for this special issue expand the authors’ understanding of globalized organizations' challenges, evolution and decline as well as offering a distinct opportunity to reconsider diverse extant theories about MNCs by suggesting an extension that accounts for the rise of various globalized organizations particularly in and from emerging markets.

Despite increased numbers of MNCs, which struggle to survive and are faced with great risk of failure, the authors’ understanding of them still remains in infancy. While scholars have investigated diverse topics related to MNCs, existing studies have developed theories predominantly emphasizing MNC success. Thus, conventional theories in IB such as internalization theory and the OLI paradigm may not be sufficiently applicable to explain the phenomenon of MNC failure (i.e. MNC decline). Based on authors’ discussions, the authors believe this is an appropriate time to refine mainstream IB theories by concurrently considering both evolution and retrogression.

This study aims to explore how subsidiary capabilities collectively configure for performance. Additionally, it seeks to examine whether these configurations of capabilities can provide equifinal solutions through developing a comprehensive research framework that focuses on subsidiaries in China.

With a data set collected through a questionnaire from 172 Korean multinational enterprises (MNEs) in China, this study used a fuzzy-set qualitative comparative analysis to detect the capability conditions and configurations. These configurations represent combinations of various subsidiary capabilities linked to high performance.

This study identified several complex pathways with distinct configurations for high subsidiary performance. The findings demonstrate the importance of configurations over individual conditions. Thus, the results highlight that the effectiveness of diverse capabilities, which are widely believed to singularly contribute to the high performance of MNE subsidiaries, depends on how each combines with other capabilities. Overall, the findings provide a richer and fine-grained understanding of the role and relative importance of various forms of MNE subsidiary capabilities and how the joint effect of these subsidiaries contributes to high performance.

This study suggests that MNE managers should comprehensively understand how subsidiary capabilities are configured to produce subsidiary performance outcomes. This specifically illustrates the importance of understanding the mutually conflicting yet collectively exhaustive results of multi-selective solutions and aims to align with China’s industrial and regional heterogeneity.

By examining the role of MNE subsidiary capability configurations, which may collectively influence the subsidiary’s performance, this study contributes to the literature. It elucidates how MNE subsidiaries may achieve superior performance by developing and possessing various capabilities tailored to the local context.

The purpose of this paper is to answer why some multinational enterprises (MNEs) fail within the international business (IB) domain.

Conceptually, the study takes an organismic approach to MNE failure. Methodologically, it adopts an elite interview approach derived from the Delphi technique. Respondents are 39 IB and strategic management academics.

The paper finds that MNE failure is rooted in strategic leadership and capabilities (i.e. internal deterioration of organizational resources and strategies) and institutional pressures and differences, and these factors lead to deterioration of institutional legitimacy for an MNE.

The paper conducts a review of the firm failure and foreign divestment literature and undertakes an organismic approach to the analysis of MNE failure in the IB context. The paper provides useful insights on developing and implementing both market and non-market strategies for overcoming MNE internationalization failure.

The foreign direct investment (FDI) motivations of emerging market multinational enterprises (EMNEs) are mainly twofold: acquisition of strategic assets in foreign markets, and foreign market penetration. While prior studies have delivered valuable insights, findings regarding the performance of those two types of FDI remain somewhat inconsistent or inconclusive. This study aims to develop complementary perspectives that can motivate scholars to explore the internal mechanisms of achieving goals for these two FDI types by providing a review of prior literature on EMNEs’ knowledge- and market-seeking FDI.

Indexed to the EBSCO database and Google Scholar from 2000 to 2020, 73 articles from 13 journals were selected and reviewed to identify the main research future research agendas.

Our findings show that the purpose of EMNEs’ FDI can be divided into value creation and value capturing, with the former pursuing knowledge-seeking and the latter pursuing market-seeking, according to our study, which draws on insights from innovation-focused literature.

International business (IB) scholars have extensively studied both knowledge-seeking and market-seeking outward FDI of EMNEs for decades. Our study contributes to the literature by providing the potential for integrating IB and innovation studies to extend the scope of EMNEs studies.

The purpose of this paper is to pinpoint key conduits promoting knowledge spillovers through inward foreign direct investment in the banking sector.

The data were obtained by a survey. The survey data were collected from managers of five major local banks in Korea. The survey was conducted during May 10-June 30, 2015 with a total of 581 self-administered responses finally collected at the end (response rate: 60.5 percent).

Based on the survey data collected from the survey, the results indicate that knowledge spillovers from foreign to local banks occur in the Korean context. Demonstration effect, worker mobility and absorptive capacity of local banks are found to be effective conduits for knowledge spillovers. In addition, the authors have also found that competitive pressure negatively influences worker mobility leading to knowledge spillovers while two other elements (i.e. demonstration effect and absorptive capacity) positively mediate the relationship between competitive pressure and knowledge spillovers.

It is essential for the managers of multinational banks vigorously consider placing a strong emphasis on security of internal information and management of own personnel as the knowledge outflow through the demonstration effect and worker mobility is critical. For the managers of local banks, the discoveries suggest that active investment in human resources to maximize knowledge spillovers through the demonstration effect and through absorptive capacity is heightened by building an internal knowledge base.

The study contributes to the extant literature in the field of international business in two key ways. First, it examines the knowledge spillovers in the banking sector, a regulated industry, in Korea where empirical research is sparse. This paper’s second contribution is the finding of the key conduits of knowledge spillover phenomena by predicting and identifying the elements which affect the magnitude of knowledge flows from foreign to local banks.

The purpose of this paper is to complement the conventional international business (IB) theory, the OLI perspective, which is good at explaining the foreign direct investments (FDIs) undertaken by developed market multinational corporations (DMNCs). This study also suggests a new theoretical framework, namely, the OILL paradigm, that is able to encompass FDIs from emerging market multinational corporations (EMNCs) toward developed economies.

The data comprising 206 Chinese MNCs, which completed international mergers and acquisitions (IMAs), were obtained from Zephyr. By using these data, logical regressions are conducted to statistically confirm that we should not omit the learning motivation if we want to adequately understand the FDI phenomenon by encompassing investment flow from developing (or emerging) to developed countries.

The results based on this data set indicate that EMNCs often try to enter developed economies with the motivation to seek sophisticated foreign host knowledge that is not available internally. In particular, they tend to use IMA strategies when they want to learn from heterogeneity (i.e. inter-industry mergers and acquisitions) and absorb advanced technologies from DMNCs.

By shedding light on the recent new trend in FDI (i.e. FDI from emerging countries to developed economies), the study provides useful theoretical implications, as well as suggesting scholarly contributions. However, we should acknowledge that there are some limitations to this study. First, the study explores only Chinese MNCs. Second, learning motivations need to be minutely and precisely measured by other studies. Third, this study argues that FDI from EMNCs to DMNCs is triggered by the former’s motivation concerning knowledge acquisition. However, the type of knowledge should be considered, and this is perhaps another avenue for future research.

Conventional IB theories, such as the OLI paradigm and internalization theory, have long sought to answer the question of why DMNCs go for foreign markets, in spite of the presence of the liabilities of foreignness, and focused on their main investment motivations (i.e. market-seeking, efficiency-seeking and resource-seeking motivations). For this reason, these theories do not adequately capture the primary FDI motivations of EMNCs, and consequently, they are unable to see the big picture when it comes to the FDI phenomenon. Based on this idea, the authors complement the well-known triad motivations (i.e. market-seeking, efficiency-seeking and resource-seeking motivations) by adding the knowledge-seeking motive and contribute to the evolution of IB theories by suggesting a new theory, which is the OILL paradigm.

The study contributes to the extant literature in the field of IB in two key ways. First, it examines EMNCs’ central motivations in conducting FDI where empirical research is sparse. By doing this, this paper attempts to solve the query indicated above (i.e. why MNCs choose FDI in spite of the presence of the liabilities of foreignness), and it offers a new theory (i.e. the OILL paradigm).

How much variance in firm performance can be attributed to firms’ corporate political activities (CPA)? Under what conditions does CPA contribute to firm performance? To theorize and empirically tackle these questions, we build on the resource-based view (RBV) to theorize how CPA might improve or hinder firm performance, and specifically examine the direct relationship between firms’ investments in lobbying activities and their performance. We also expect firm growth rate to moderate the relationship between lobbying and performance.

We empirically test our hypotheses using large-scale longitudinal panel data from publicly traded US firms from 2008 to 2018.

Our analyses support our predictions of the double-edged sword effect of lobbying on firm performance. Moreover, our results show that this effect is steeper for firms with higher growth rates.

Our study contributes meaningful insights to strategy scholarship on the influence of nonmarket strategies, highlighting the relevance of firm-specific conditions in shaping the performance outcomes of such strategies. In particular, we make a contribution by identifying a nonlinear relationship between lobbying and firm performance, which is amplified in fast-growing firms compared to stagnant ones.