Multinationals and institutional competitiveness (original) (raw)
Related papers
Erim Report Series Research in Management Erasmus Research Institute of Management, 2005
AND KEYWORDS Abstract The debate on globalization has long been characterized by theses of institutional convergence and divergence. The emergence of Anglo-Saxon shareholder capitalism as the dominant paradigm since the start of the 1990s is associated with the pursuit of global strategies by Multinational Enterprises (MNEs) and the consolidation of a multilateral trade regime. Yet the link between actual MNE strategies and developments in the institutional arena remains an understudied phenomenon. Tensions between multiple levels of institution buildingunilateralism, regionalism and multilateralism -create an environment of strategic uncertainty for MNEss. Consequently, MNEs' actual international strategies reveal much about perceptions of the institutional environment in which they operate and allows for the documentation of more subtle paradigm shifts. The internationalization strategies pursued by MNEs from the Triad over the 1990s reveal that a multilateral strategic reality was anticipated by only an elite few, while the vast majority of firms operated in a unilaterally-or at best regionally-determined institutional environment. This contribution suggests that institutional restructuring is multifaceted and sometimes contradictory, casting a new and more subtle light on the globalization debate. Free Abstract The debate on globalization has long been characterized by theses of institutional convergence and divergence. The emergence of Anglo-Saxon shareholder capitalism as the dominant paradigm since the start of the 1990s is associated with the pursuit of global strategies by Multinational Enterprises (MNEs) and the consolidation of a multilateral trade regime. Yet the link between actual MNE strategies and developments in the institutional arena remains an understudied phenomenon. Tensions between multiple levels of institution buildingunilateralism, regionalism and multilateralism -create an environment of strategic uncertainty for MNEss. Consequently, MNEs' actual international strategies reveal much about perceptions
Exploring the Role of Institutional Context in the Multinationality-Performance Relationship
We analyze the relationship between multinationality and firm performance from the perspective of differing institutional contexts. We use the institutional theory to develop a framework depicting the role played by institutional factors in the multinationality-performance relationship. It is argued that the institutional context has significant performance implications for multinational firms. This impact on the performance varies depending on the degree of multinationality the firm has already achieved.
The locally embedded multinational and institutional capture
Area, 2000
Recent innovations in corporate organization have seen a growing body of literature entertain the idea that internationally mobile investment may be becoming more attached to local economies. Increasingly, these corporate dynamics are being met by national and sub-national initiatives to attract and embed multinationals This paper explores the implications o f this convergence of corporate and institutional dynamics primarily at the local, sub-national scale. Recognition of the highly politicized nature of MNE-institution relations at the sub-national scale raises questions over the efficacy o f sub-national institutional capacity in the attraction and development of FDI and highlights the prospect of some form o f capture of sub-national institutional capacity.
MNE institutional advantage: How subunits shape, transpose and evade host country institutions
Scholars increasingly emphasize the impact of institutions on multinational enterprises (MNEs), but the opposite relationship has attracted less researchthat is, MNE agency in relation to institutions. Based on a comparative case study of six MNEs from the United States and Sweden, this paper remedies this. It explores and explicates MNE subunits' strategic responses to host country institutional constraints and opportunities in five different regions. A new-institutional approach is adopted, which allows for an investigation of MNE subunit agency in relation to normative and cognitive institutions, as well as regulative ones. This fine-grained analysis reveals not only what kinds of responses MNE subunits invoke, but why and how they are able to respond. We identify four strategic responses by which subunits shape, transpose and evade institutions in the pursuit of competitive advantage: Innovation, Arbitrage, Circumvention and Adaptation. These responses are driven by three key enablers: multinationality, foreignness and institutional ambiguitythat serve to enhance and heighten three mechanisms: reflexivity, role expectations and resources. By linking the enablers and the mechanisms to specific types of strategic responses in a framework and typology, the paper not only contributes to emerging research on the interplay between MNEs, institutions and strategy, but to strategy practice.
Globalization and institutional competitiveness
Regulation & Governance, 2007
Only dead institutions do not change and only rarely do institutions change by themselves. To maintain performing institutions takes institutional entrepreneurs who are willing to take risks and who possess the capacity and the talent to innovate. A regulation discourse, in contrast to a marketization discourse, would not picture the relationship between globalization and institutional change as a deterministic one. Rather, it would expect that all kinds of actors play a large number of different roles in the course of ongoing institutional change. The result of such complex institutional change, at the level of welfare states, multinational businesses, public administration, and training systems, to mention just a few of the empirical areas covered in this special issue, cannot be fully understood by applying an overly rigid, static, and dualistic approach to modern capitalist economies. The concept of institutional competitiveness, on the contrary, allows for institutional entrepreneurship and institutional hybrids constituting pulsating polities.
Journal of International Management, 2016
The question of how institutional aspects can shape multinational enterprises' (MNEs) operations abroad and overall performance has received increasing attention in the international business literature. We address this issue by meta-analyzing the effects of home country formal institutions on MNEs' multinationality-performance (M-P) relationship using data from 170 independent studies covering over 54,600 firms from 26 countries. By focusing on specific policies such as capital market development, labor market flexibility, regulatory quality, control of corruption, and trade openness, we provide evidence that home country institutions can significantly influence MNEs' M-P relationship. From a multilevel approach, our findings indicate that a stronger institutional environment not always positively affects the M-P relationship. For developed market firms, the M-P relationship gets stronger with an improved institutional environment. However, in emerging markets, we find that the M-P relationship is actually weaker in cases of higher levels of home country labor flexibility and control of corruption. We discuss the implication of these findings showing that home country institutions have a significant and contrasting role in shaping MNEs' capacity to increase performance from their multinational investments.
The institutional environment for multinational investment
2000
Abstract This article posits that the effect of political hazards on the choice of market entry mode varies across multinational firms based on the extent to which they face expropriation hazards from their potential joint-venture partners in the host country (the level of contractual hazards). As political hazards increase, the multinational faces an increasing threat of opportunistic expropriation by the government.
Journal of Business Research, 2021
The importance of institutions has become more relevant analytically in recent years, emphasizing the significance of an appropriate institutional framework for international competition. This paper aims to identify the link between institutions, institutional quality, and international competitiveness. Following the TCCM (Theory, Context, Characteristics, and Methodology) framework analysis, proposed by Paul & Rosado-Serrano (2019), we conducted a systematic literature review of top tier journals during the period 2000-2020. This review unfolds the theoretical and empirical studies regarding institutions, institutional quality, and international competitiveness. Main findings reveal five widely studied, three emerging and two understudied theories, the most studied contexts are country and firm, and quantitative studies are the main method of analysis. This review incorporates the acumen of previous research and provides a future research agenda in understudied contexts like industrial and individual level by applying emerging theoretical approaches and integrative analytical methodologies.