Search results

Cross‐border mergers and acquisitions present significant opportunities for firms wishing to diversify their activities geographically, learn new knowledge, and gain access to valuable resources. Cross‐border mergers and acquisitions present multiple challenges as well. These include the difficulty of evaluating target firms, cultural and institutional differences, and the liabilities of foreignness among others. We compare acquisitions to enter new markets with other market entry mechanisms (strategic alliances and greenfield ventures), and conclude with suggestions for future research to advance our knowledge of this strategy of increasing importance globally.

Research on diversification has produced insights into possible linkages between organizational scale and scope and firm performance. However, the paucity of research on strategy implementation has hindered our understanding of the broader performance implications of diversification. We extend the resource-based view and diversification research by examining how firms can exploit diversifying investments designed to achieve scale and scope economies. Successful firms more effectively structure their resource portfolio, bundle resources into capabilities, and leverage these capabilities when implementing a diversification strategy. We develop a model linking strategies by which firms expand product and geographic market scope to the actions they take to manage resources. We examine three actions – internal development, acquisitions, and strategic alliances – and discuss the implications of these actions using the resource management framework.

To function effectively in both the near and distant future, leaders in global organizations must understand, develop and exercise trust and social capital. The competitive landscape in the new millennium necessitates that firms develop strategic flexibility. To do so, they must continuously renew their knowledge stock and produce innovations. To implement these strategies, leaders must build effective relationships among members and units in the organization. This relational capital is based on trust and eventually leads to the development of internal social capital. Leaders must also build effective relationships with external constituencies. This is often accomplished through strategic alliances. Similarly, leaders must build mutual trust among alliance partners that over time leads to the development of external social capital. When employees trust leaders, they are more likely to be committed to the organization’s goals, willing to develop firm-specific knowledge and likely to exercise creativity. Likewise, partners in trusting alliances are more likely to transfer knowledge, and contribute to a firm’s innovation. These actions are important in global organizations, but difficult to achieve.

In 2006, a cover story in Business Week suggested that global forces are largely controlling the domestic U.S. economy and that there is little that the U.S. government can do. Currently, the United States imports almost $2.2 trillion in foreign goods; in contrast, the U.S. government receives approximately $2.4 trillion in revenues. And, in 2007, the costs of imports are expected to exceed government revenues. In the past, the United States has had a major influence on the world's economy, but this influence is waning (Mandel & Dunham, 2006). The substantial development of several country economies such as in China and India and growing competition in global markets have fueled this change. These changes have heightened the importance of firms’ international strategies and increased the need for more and better research to understand how to develop such strategies and implement them successfully (Nachum & Zaheer, 2005).

The field of strategic management has advanced substantially in both theory and empirical research over the last 25 years. However, there are “cracks” beginning to occur in the methodology “dam.” To grow as a discipline, strategic management research must meet and deal effectively with methodological challenges in several areas. We address these challenges in each of the following areas: research questions, data collection, construct measurement, analysis of endogenous relationships, and applications. We present a concise view of the future suggesting ways in which these challenges can be overcome and explain the benefits to the field.

Prior research on international diversification has focused primarily on multinational enterprises (MNEs) from developed economies, such as the U.S. and other developed nations. As an increasing number of MNEs are now located in emerging economies, new theoretical frameworks are needed to better understand the motivations of these MNEs to diversify internationally. This paper contributes to the theory development of MNEs by examining the characteristics of international diversification by business groups from emerging economies. Using the resource-based view (RBV) of the firm and organizational learning theory, we suggest that the international diversification motives of business groups from emerging economies vary by host country context. Business groups from emerging economies are more likely to enter developed economies (rather than other emerging economies) when their primary aim is exploring new resources and capabilities, and more likely to enter other emerging economies (rather than developed economies) when their primary aim is to exploit existing group resources and capabilities. We also suggest that these motives influence business-group performance. We identify two important moderators of these relationships: product diversification and social capital. Because of the importance of the business-group organizational form in emerging economies, understanding business-group international diversification may lead to improved MNE theory.

Because of the importance of a global mindset from both a theoretical and a practical point of view, there is need to examine this construct further to understand its contents, how it is developed, when and how it should be applied, and what its consequences are. Thus, we invited a select group of scholars to develop chapters on specific aspects of this topic to help build a volume accomplishing these goals. Our aim here was to invite the foremost thinkers and writers on this topic.

The early research on multinational enterprises usually relied on traditional economic theory or relatively simple, but powerful, theories developed in the field of international business. They were developed to help us understand why firms entered international markets (e.g. Dunning’s eclectic theory). However, as the field of international management (and international business) has developed further, with more scholars from adjacent disciplines conducting research on issues of importance to international markets and multinational firms, newer, more diverse and complex theoretical perspectives have been developed and diffused. The purpose of this volume is to explore some of these important and newer theoretical perspectives. For example, herein, we examine the recent theoretical work on the metanational that emphasizes knowledge-sharing among subsidiaries on a global basis. We also explore theoretical issues related to international entrepreneurship, a new, important, and growing perspective in the field of international management. Additionally, we include work focused on the liabilities of foreignness and other critical issues in the management of multinational enterprises. As such, we believe that this volume provides a basis for future research on the multinational enterprise, and we hope that the work contained herein serves as a catalyst for such research using the different theoretical perspectives examined herein.

This chapter contributes to the existing literature on institutional theory and international business research by integrating the concepts of polycentrism and institutional learning to examine how MNEs from emerging economies invest in developed countries. We argue that equity-based market entry modes and non-equity-based modes create different needs for learning about economic, regulatory and political institutions; entry modes with or without local partners lead to different levels of institutional embeddedness and institutional learning speeds. Finally, the content of institutional knowledge also determines its transferability and adaptability. We emphasize the importance of recognizing the integrated nature of economic, regulatory and political institutions from a polycentric perspective and discuss their change in different situations.