Search results

Whether by direct or indirect action (or by inaction), multinational enterprises (MNEs) can have both a positive and a negative effect on within-country social and economic inequality. This paper aims to comment on this multifaceted relationship between MNEs and within-country inequality.

Given the absence of either robust theory or evidence in the neglected realm of MNEs and within-countries inequalities, this paper offers some general observations, highlights some of the key issues and illustrates possible avenues for future research studies.

The capacity of MNEs to upgrade economic activity in the host country is a key policy objective. MNEs have arguably contributed to reducing income inequalities between countries. However, the limited evidence available suggests that the gains of FDI are rarely evenly distributed within recipient countries, and many of the underlying dynamics need further investigation.

The authors broaden the engagement with inequality beyond income levels, as this is just one aspect of inequality that shapes or impedes human development. They believe it is necessary – for both MNEs and policymakers – to have a more nuanced understanding of how, and under what circumstances, the presence of MNEs affects inequality in host economies.

This paper relates the large literature on inequality (going beyond the mainstream focus on income inequality) to the mainstream understanding of MNE-assisted development.

This paper aims to discuss the opportunities and limitations that the location-specific advantages of the home country represent for infant multinational enterprises (MNEs). The systemic weaknesses of the home country can constrain the long-term competitiveness of its firms and, ultimately, the competitiveness of its MNEs. Many emerging countries have a constrained set of location-specific (L) assets from which their firms are able to develop ownership-specific assets.

The authors examine data for the case of India, an economy regarded as having considerable potential to expand to knowledge-intensive sectors, using a “systems of innovation” framework, merged with an analysis of L advantages.

At the macro level, India’s performance is not different from countries of similar economic structure, and its current pockets of excellence are a reflection of its L assets. The analysis suggests that the failure to foster and upgrade the L assets of emerging economies is likely to stunt the growth of their domestic firms and, ultimately, any new MNE activity in the long-term.

In the case of India, systemic policy changes are needed to upgrade the knowledge infrastructure and institutions to support a shift in the competitive advantages to new sectors outside existing pockets of excellence. Indian firms are unlikely to be able to rely on the knowledge infrastructure of their home economy and will “exit” the Indian milieu because of weaknesses in L assets, as much as to seek markets and customers elsewhere. There will be few opportunities for new generations of firms to venture abroad from a position of strength, rather than as a means to overcome their home country disadvantages.

The evidence would suggest that – like other emerging economies – Indian firms are unlikely to be able to rely on the knowledge infrastructure of their home economy and are “exiting” the Indian milieu because of its weaknesses in L assets, as much as to seek markets and customers elsewhere. Most importantly, India faces a potential shortage of skilled human capital in the medium term.

The purpose of this paper is to introduce a new theoretical framework called the “extended dual economy model”. Based on the seminal work of Lewis (2014), the author uses it to explain the sectoral specialisation of home countries and their firms and MNEs.

The paper is multi-disciplinary and entirely conceptual, with cool ideas but very few numbers and equations.

Emerging economies exhibit a “duality” in their economic structure that reflects itself in two largely different sets of location (L) characteristics. They are simultaneously home to both “traditional” sectors, which are resource and labour intensive, as well as “modern” sectors, which are knowledge and capital intensive, each of which can be analysed as having two sub-economies. These different sets of location advantages shape the firm-specific advantages of EMNEs and their FDI.

This analysis helps to underline what shapes the ability of home countries to “emerge”, and the ability of their firms to grow and their MNEs to become internationally competitive. Few EMNEs can thrive in international markets without concurrent growth in their domestic markets. Maintaining the appropriate location assets to optimally support both types of sectors is costly. Each type of sub-economy requires different kinds of support sectors, infrastructure and policies, with little overlap. Weaknesses in its home country L advantages hinder the long-term competitiveness of their EMNEs.

Few EMNEs can thrive in international markets without concurrent growth in their domestic markets. Weaknesses in its home country L advantages hinder the long-term competitiveness of their EMNEs.

The extension of the Lewisian dual economy model allows a number of interesting new insights because it allows us to consider firms, non-firms, informality and the bottlenecks associated with promoting knowledge-intensive sectors in a globalised world. It emphasises structural change, and the need to manage pathways and effectively channel growth.

Organizational innovation (OI) is important for multinational enterprises to adapt to changes in their broader technological and market environments. Despite its power to transform organizations, OI has remained at the periphery of international business (IB) scholarship. The purpose of this paper is that IB is particularly equipped to further the understanding of OI. IB studies place significant value on “context” and how the context in which the firm operates can enable or hinder the evolution of internal routines and practices, leading (or not) to OI.

The authors identify the key challenges which have contributed to the seemingly less important role of OI in IB, notable among them being the ambiguity of concepts associated with OI across different research fields. The authors advance the research agenda by offering a comprehensive definition of OI. The authors then put forward an integrative framework where the authors discuss the importance, and contribution, of IB to OI and vice versa.

The literature is characterized by terminological and empirical ambiguity. Some management scholars have coined the term “management innovation” with a clear element of invention and state-of-the-art attached to it. Others have referred to “organizational innovation,” when exploring incremental and targeted changes to extant team- and firm-level practices. In turn, IB scholars developed their own terminology, often (implicitly) referring to technological innovations as “asset-type firm-specific advantages” (FSAs) and associating OI with “transaction-type” FSAs.

The authors offer a new definition for OI – to address the challenges associated with terminological ambiguity. The authors put forward an integrative framework of OI in IB. The proposed framework of OI emphasizes the wider organizational context in which OI takes place, i.e. firm heterogeneity; and the broader external (IB) context of OI.

Despite the keen interest in radical and incremental innovation, few studies have tested the varying impact of firm-level factors in service sectors. This paper analyses how collaboration with existing and prospective users and investments in knowledge management (KM) practices can be adapted to maximise the outputs of radical and incremental process innovation in a knowledge-intensive business service industry.

Original survey data from 166 information technology service firms and interviews with 13 executives provide the empirical evidence. Partial least squares-structural equation modelling is used to analyse the data.

Collaboration with different types of users, and investments in KM practices affect radical versus incremental process innovation differently. Collaboration with existing users influences incremental process innovation directly, but not radical innovation; and prospective user collaboration matters for radical, but not incremental innovation. Furthermore, for radical innovation, investments in KM practices mediate the impact of prospective user collaboration on innovation.

While collaboration with existing users for incremental process innovations does not appear to generate significant managerial challenges, to pursue radical innovations firms must engage in intensive collaboration with prospective users. Higher involvement with prospective users requires higher investment in KM practices to promote efficient intra- and inter-firm knowledge flows.

This study is based on a large-scale survey, together with management interviews. Radical and incremental innovations in the service industry require engagements with different kinds of users, and the use of KM tools.

Since China initiated its “go global” policy that promotes its overseas investment, China’s Outward Foreign Direct Investment (OFDI) has increased almost twenty times during the last 10 years, reaching $55.9 billion in 2008. The issue of internationalization of Chinese OFDI has attracted increasing attention of researchers from a business perspective. This article systematically reviews the previous studies on overseas investments by Chinese MNEs and discusses the characteristics of Chinese internationalization behavior at both firm level and country level. The internationalization of Chinese companies cannot be understood as a simple game of “catch up” with established MNEs, and more firm‐level empirical studies should be carried out on how these characteristics influence firms’ strategic decisions.

The eclectic paradigm as developed by Dunning evolved in response to the changing IB milieu. I argue that this continual expansion threatens to make the paradigm tautological, without an honest “gatekeeper.” Continual expansion to address new lacunae begins to have decreasing returns, either because the gatekeeper cannot expect to have the specialized knowledge, or because the number of extensions makes the final product unwieldy. I propose a return to a basic eclectic paradigm, which I refer to as “EP‐lite,” that can then be complemented by other frameworks and theories as needed. In a similar vein, the growing number of sub‐categories of ownership advantages does not in itself provide greater clarity. Besides, the “correct” definition of what constitute O advantages is relative to the purpose for which it is being used.

This chapter examines the role of foreign direct investment (FDI) in promoting industrial development, and asks, if FDI is such an important avenue to promote development, why is there little evidence on concomitant industrial development in most developing countries?

I look at the secondary evidence on FDI and development and explore some of the causes for this ambiguity.

The complexities of global value chains and networks have begun to trivialise the simplistic principle that increased multinational enterprise (MNE) activity automatically implies a proportional increase in spillovers and linkages.

Policies towards MNEs need to be closely linked and integrated with industrial policy. MNE activity needs to be evaluated by considering the kinds of externalities that are generated; whether and how domestic actors can internalise them, and building up absorptive capacities to achieve this.

This paper examines the role of location‐specific (L) advantages in the spatial distribution of multinational enterprise (MNE) R&D activity. The meaning of L advantages is revisited. In addition to L advantages that are industry‐specific, the paper emphasises that there is an important category of L advantages, referred to as collocation advantages.

Using the OLI framework, this paper highlights that the innovation activities of MNEs are about interaction of these variables, and the essential process of internalising L advantages to enhance and create firm‐specific advantages.

Collocation advantages derive from spatial proximity to specific unaffiliated firms, which may be suppliers, competitors, or customers. It is also argued that L advantages are not always public goods, because they may not be available to all firms at a similar or marginal cost. These costs are associated with access and internalisation of L advantages, and – especially in the case of R&D – are attendant with the complexities of embeddedness.

The centralisation/decentralisation, spatial separation/collocation debates in R&D location have been mistakenly viewed as a paradox facing firms, instead of as a trade‐off that firms must make.