Gabriel R. G. Benito

Divestment of foreign production operations

This study investigates some determinants fo the divestment of foreign manufacturing operations by Norwegian companies. To date, very few studies have taken a closer look at what might influence whether foreign subsidiaries are divested or not. Although foreign direct investment - in principle - represent long-term commitments to foreign manufacturing operations, divestments are in fact quite common. This study shows that more than half of a sample of foreig subsidiaries woned by Norwegian companies in 1982 wee divested within a period of ten years. The empirical findings indicate that foreign divestment is inversely related to economic growth in the host country, and that the propensity to divest is significantly higher for subsidiaries that had been acquired than for greenfield establishments. Also, related (horizontal) subsidiaries are less likely to be divested than unrelated (non-horizontal)subsidiaries.

Knowledge, internationalization of the firm, and inward–outward connections

Abstract Even though outward operations such as exports and foreign investment have received most of the attention so far, the internationalization of businesses also includes activities that are inwardly oriented. Inward activities like purchases of machinery, the procurement of raw materials and semifinished goods provide opportunities for building relations with foreign actors. They also offer opportunities to learn about foreign trade techniques and ways of using various operation modes, and by active use of such knowledge companies should be in a better position to start or extend outward foreign operations. This paper presents a case study of the Norwegian company Moelven Industrier ASA and its operations in the Russian market. It shows that the creation and utilization of knowledge through inward–outward connections face many obstacles and that, in Moelvens case, the full potential of such connections was seldom realized.

The Performance Differential between Private and State Owned Enterprises: The Roles of Ownership, Management and Market Structure

This article examines differences in performance between private companies (POEs) and state owned enterprises (SOEs), with an emphasis on the effects of market structure. The study uses a comprehensive panel covering in principle all registered companies during the 1990s in Norway, a country where SOEs play an important role in regular markets. Return on assets as well as costs relative to sales revenue are used as measures of performance in markets where SOEs and POEs compete with each other. Overall, POEs perform significantly better than SOEs. The study tests the hypothesis that SOE managers may learn from POE managers in environments with stronger competition, but finds only weak empirical support for such a learning mechanism.

Change of foreign operation method: impetus and switching costs

This paper explores what factors motivate exporters to change their foreign market servicing mode from using independent distributors and agents to setting up their own local sales organization, and what factors impede such changes (switching costs). Using data from a sample of 214 Danish exporters, of which 32 had changed their foreign operation method between 1992 and 1997, the analysis shows that switching cost factors are indeed of particular importance in order to explain the incidence of such changes.

Distant Encounters of the Third Kind: Multinational Companies Locating Divisional Headquarters Abroad

We examine the location and relocation abroad of divisional headquarters of companies originating in a small country on the periphery of Europe. While the internationalization of business activities has been extensively studied for more than four decades, there is limited research on the strategic decision to locate divisional headquarters outside the home country. Our study shows a massive movement of headquarters functions between 2000 and 2006. Building on agency, resource based, and institutional perspectives, we propose that such moves are driven by efficiency/effectiveness as well as legitimacy factors. We find that state ownership and ownership concentration discourage MNCs from moving headquarters activities abroad, but national ownership does not. We also find that while MNCs may move their divisional headquarters to gain efficiency by co-locating with foreign subsidiaries, they keep them at home when the company becomes large, highly diversified and complex to manage.

An exploration of the information behaviour of Norwegian exporters

This article reports on the results of a survey of 221 Norwegian companies in which the nature and role of information was examined in the context of exporting and export-related activities. Amongst major findings was that Norwegian exporters place their main emphasis on informal contacts as a basis for information gathering. As sources of information, customers (external) and sales people (internal) emerged as being of particular importance. Regarding the decision-making issues for which information was sought, entry into a new market and change of agent were singled out as the most important. General information about foreign markets was ranked as the most important area of information. Significant differences were found between small and large companies across a range of aspects of information behaviour. The findings indicate that resources are a prerequisite to engaging in systematic information gathering, but also that the need for structured analysis of business operations in foreign markets is felt more strongly by large companies.

Ownership structures of norwegian foreign subsidiaries in manufacturing

This article explores how Norwegian multinational companies select ownership structures for their foreign manufacturing subsidiaries. Hypotheses are drawn from various theoretical perspectives on the choice of wholly owned versus partly owned affiliates. The hypotheses are tested on a sample of 174 foreign direct investments made by Norwegian companies. One main finding is that political risk of the host country strongly increases the probability that ownership of a foreign subsidiary is shared. The results also suggest that cultural distance between the home and the host countries leads to a higher propensity to joint venture. Other results were less conclusive and little support was found for a transaction coast approach to choice of ownership structures.

Replacing the Foreign Intermediary: Motivators and Deterrents

Abstract What factors impel exporters to replace a foreign intermediary (i.e., agents or distributors), and what factors impede such actions? Dissatisfaction with the current intermediary is the explanation typically given for why intermediaries are replaced, but other factors may also influence the likelihood of such a change. Using longitudinal data from a sample of Danish exporters, we apply logistic regression analysis to model the impact of a number of factors. Our data show that dissatisfaction with the local intermediary does not appear as a determinant of replacement. Instead, changes in the level of information asymmetry exert the most important influence on the decision to replace the foreign intermediary. As an exporter becomes more informed about alternative—and potentially more qualified—intermediaries operating in a particular market, the existing intermediary faces a higher risk of being replaced. The study also shows that switching costs are important impediments to change of intermediaries.

Why and how motives (still) matter

Purpose – The paper aims to provide a discussion of the relevance of motives for companies’ internationalization. Design/methodology/approach – This paper is a conceptual discussion building on established classifications of motives of internationalization, which distinguish between market-seeking, efficiency-seeking, resource-seeking and strategic asset-seeking motives. Findings – The analysis demonstrates that important issues in companies’ internationalization differ systematically across different types of motives, which implicates that motives remain relevant when analyzing various aspects of the internationalization of the firm. Motives are also useful elements for theory building in international business. Research limitations/implications – The analysis is purely conceptual and is not further substantiated by empirical evidence. Practical implications – The classification of motives is a useful tool for companies to analyze their strategic alternatives and actions, especially with regard to perfor...

A review of research on outward foreign direct investment from emerging countries, including China: What do we know, how do we know and where should we be heading?

Abstract Using the Antecedents, Decisions and Outcomes (ADO) format as an organizing framework, this article gives an overview of the literature on different dimensions and characteristics of outward foreign direct investment (OFDI) by firms from emerging countries. Based on an extensive coverage of studies published over a period of nearly 25 years between 1993 and 2017, we review extant research on this phenomenon from mainly China, as well as other emerging countries. We identify advances and analytical areas of OFDI research and pinpoint the key theories, methodologies, observed characteristics and the variables that have been examined in this growing research literature. Many areas of the above research themes remain underexplored, despite recent significant advancements, and may provide directions for future research.