Heather Berry

Why Do Firms Divest

In this paper, I examine how lower-cost production and new market opportunities influence the divestment decisions of firms. I argue that lower-cost production and new market opportunities in foreign markets can provide a better use of existing firm resources and posit that these opportunities are likely to influence firm divestment of home-country operations. The empirical results from a panel of 190 U.S. firms over a 20-year period (1981--2000) show that lower-cost production and new market opportunities influence the divestment decisions of firms. However, the results also reveal several interesting moderating influences on the hypothesized trade-offs and differences across the growth strategies of firms in low-and high-research and development intensive industries. By considering how and when investment in lower-cost production and new market opportunities impacts firm divestment decisions, this study examines divestment not only as a choice managers make when dealing with poor or struggling operations, but also as a response to better opportunities for firm resources in other markets. By focusing on the trade-offs managers make across product and geographic markets, this paper examines the role divestment can play in firm growth and expansion strategies.

When Do Firms Divest Foreign Operations

Extant literature on divestment has repeatedly found that firms are likely to divest their poorly performing operations. In this paper, I consider how product market relatedness and geographic market differences in growth, policy stability, and exchange rate volatility can moderate the negative relationship between performance and divestment. Results from a comprehensive panel of U.S. multinational corporations MNCs reveal that conventional arguments about poor performance hold for both related and unrelated firm operations in countries characterized by low growth, policy stability, and exchange rate stability. However, the results also show that there are significant differences across the divestment decisions of firms for their related and unrelated foreign operations in countries characterized by high growth, policy instability, and exchange rate volatility. Although poor performance has been called the most significant predictor of divestment, this paper considers how interactions across multilevel factors influence the divestment decisions of firms and reveals how U.S. MNCs respond to both product and geographic market characteristics when making divestment decisions for their foreign operations.

Global Sourcing and Foreign Knowledge Seeking

We develop and test a rigorous theoretical account of firm global sourcing decisions, distinguishing the antecedents of offshore integration from those of offshore outsourcing. Although traditional theories of global sourcing focus on lowering costs, we argue that as high-performing firms seek to develop new capabilities by tapping into foreign knowledge, they will increasingly turn to offshore integration to reap colocation benefits and overcome expropriation challenges. By contrast, offshore outsourcing will be preferred by less profitable firms seeking to tap into low-cost inputs, especially as investments in information technology lower monitoring costs. Empirical analysis of a comprehensive panel of cross-border product transfers by U.S. manufacturing multinational corporations from 1989 to 2004 reveals support for these arguments. Our study thus highlights the effect of foreign knowledge seeking on global sourcing and helps explain recent trends in this increasingly important phenomenon, especially ...

Managing valuable knowledge in weak IP protection countries

Although knowledge assets provide multinational corporations (MNCs) with competitive advantages in foreign markets, it can be difficult for firms to protect their knowledge in foreign countries – especially countries with weak intellectual property (IP) protection. Building on and extending the knowledge management, institutional theory and expatriate literatures, this article explores whether home country expatriates can substitute for weak IP protection and drive an increase in more and more valuable knowledge transfers to foreign operations located in weak IP protection countries. Because of their ties to headquarters, knowledge of parent firm assets, priorities and routines, and activities in local operations, I argue that home country expatriates can transform the local operation to offer higher protection for parent firm knowledge in weak IP countries in ways that local managers cannot. The results from a comprehensive panel of US multinationals suggest that home country expatriates can substitute for weak IP protection, but that this effect is contingent on the manufacturing and knowledge capabilities of foreign operations for higher value parent firm knowledge transfers. Overall, this article extends our understanding of the global management and protection of knowledge by MNCs by exploring how organizational practices can buffer country-level institutional deficiencies for firm knowledge.RésuméMême si le capital des connaissances fournit aux entreprises multinationales des avantages concurrentiels sur les marchés étrangers, il peut être difficile pour les entreprises de protéger leurs savoirs dans les pays étrangers – en particulier dans les pays offrant une faible protection concernant la propriété intellectuelle (PI). Reprenant et prolongeant les littératures sur la gestion des connaissances, la théorie institutionnelle et les expatriés, cet article étudie si les expatriés du pays d’origine peuvent se substituer à la faible protection de la propriété intellectuelle et conduire à une augmentation des transferts de connaissances de plus grande valeur pour les opérations situées dans des pays à faible protection de la PI. En raison de leurs liens avec le siège, le capital des connaissances de la maison mère, des priorités et routines, et des activités relatives aux opérations locales, j’argumente que les expatriés du pays d’origine peuvent transformer l’opération locale pour offrir une meilleure protection des connaissances de la maison mère dans les pays à faible protection de la PI, et ce d’une façon que les dirigeants locaux ne peuvent pas faire. Les résultats d’un vaste panel de multinationales américaines suggèrent que les expatriés du pays d’origine peuvent se substituer à la faible protection de la propriété intellectuelle, mais que cet effet dépend des capacités de production et de connaissances des opérations à l’étranger pour des transferts de connaissances de la maison mère à plus forte valeur. Dans l’ensemble, cet article élargit notre compréhension de la gestion globale et de la protection des connaissances par les multinationales en explorant comment les pratiques organisationnelles peuvent limiter les effets des déficiences institutionnelles d’un pays concernant les connaissances des firmes.ResumenAunque los activos de conocimiento dan a las empresas multinacionales ventajas competitivas en mercados extranjeros, puede ser difícil para las empresas proteger su conocimiento en países extranjeros – especialmente en países con una débil protección de la propiedad intelectual (IP). Sobre la base y extendiendo las literaturas de gestión del conocimiento, teoría institucional y expatriados, este artículo explora si los expatriados en el país de origen pueden sustituir la debilidad de la protección de la propiedad intelectual e impulsar un aumento en más y más transferencias valiosas de conocimiento a las operaciones extranjeras ubicadas en países con débil protección de la propiedad intelectual. Debido a sus vínculos con la casa matriz, el conocimiento de los activos de la empresa, las prioridades y rutinas, y las actividades de las operaciones locales, sostengo que los expatriados en el país de origen pueden transformar las operaciones locales para ofrecer mejor protección para el conocimiento de la casa matriz en países con propiedad intelectual débil en maneras que los gerentes locales no pueden. Los resultados de un amplio panel de multinacionales estadounidenses sugieren que los expatriados en el país de origen pueden sustituir la debilidad de la protección de propiedad intelectual, pero que este efecto es contingente de las capacidades de manufactura y conocimiento de las operaciones extranjeras para transferencias de conocimiento de mayor valor para la empresa matriz. En general, este artículo extiende nuestro entendimiento de la gestión global y la protección de conocimiento por parte de las multinacionales mediante la exploración de cómo las prácticas organizacionales pueden amortiguar las deficiencias institucionales a nivel país para el conocimiento de la empresa.ResumoEmbora os ativos de conhecimento ofereçam às empresas multinacionais vantagens competitivas em mercados estrangeiros, pode ser difícil para as empresas protegerem seus conhecimentos em tais países - especialmente em países onde a proteção à propriedade intelectual (IP) é fraca. Baseando-se e estendendo as literaturas sobre gestão do conhecimento, teoria institucional e expatriados, este artigo explora se os expatriados do país de origem podem substituir a fraca proteção à IP e impulsionar um aumento na quantidade e no valor das transferências de conhecimento para operações no exterior localizadas em países em que é fraca a proteção da IP. Por causa de seus vínculos com a matriz, de seu conhecimento dos ativos, prioridades e rotinas da empresa controladora, e das atividades nas operações locais, eu argumento que os expatriados do país de origem podem transformar a operação local para oferecer maior proteção aos conhecimentos da empresa controladora em países de fraca IP de formas que os gerentes não podem. Os resultados de um painel abrangente de multinacionais norte-americanas sugerem que os expatriados do país de origem podem substituir a fraca proteção da PI, mas que esse efeito depende das capacidades de fabricação e conhecimento das operações no exterior para transferências de conhecimento de maior valor da empresa controladora. No geral, este artigo estende a nossa compreensão sobre gestão global e proteção do conhecimento por empresas multinacionais ao explorar como as práticas organizacionais podem amortecer deficiências institucionais a nível de país para o conhecimento da empresa.概要虽然知识资产在外国市场为跨国公司提供竞争优势,公司在外国可能难以保护它们的知识 —尤其是在对知识产权(IP)保护薄弱的国家。建立于并拓展知识管理、制度理论及外派文献,本文探讨了本国的外派人员是否可以在薄弱的IP保护国家里替代薄弱的知识产权保护,并推动对海外运营有更多价值的知识转移的增长。因为他们与总部的关系,有关母公司资产、优先事项和程序以及当地运营活动的知识,我认为本国外派人员可以改良当地运营,在薄弱的IP国家以当地经理人不能办到的方式为母公司知识给予更高的保护。来自美国跨国公司的一个综合专家组的调查结果表明,母国的外派人员可以替代薄弱的知识产权保护,但效果由为母公司更高价值知识转移的海外运营的制造和知识能力而定。总之,本文通过对组织实践如何能缓冲国家层面公司知识制度不健全的探讨,拓展了我们对跨国公司全球知识管理和保护的理解。

What Do We Know about Going Global Early? Liabilities of Foreignness and Early Internationalizing Firms

In this chapter, we embrace the recent phenomenon of early internationalizing firms with the goal of understanding these firms in light of decades of research on multinational firms, which has long stressed liabilities of foreignness. It is often implicitly assumed that the only way to reduce liabilities of foreignness is by doing business in foreign markets and learning about the local business environment. However, in this chapter, we focus on several distinctive antecedent firm characteristics that have been shown to facilitate early international expansion by firms, but which are not commonly considered in the international business literature. We perform a systematic review of the literature on early internationalizing firms (following David & Han, 2004), based on the seminal work of Oviatt and McDougall (1994) to guide our analysis of early internationalizing firms and to identify important ways in which these firms differ from multinational firms. We argue that long-standing arguments about the impact of liabilities of foreignness on firm foreign expansion apply to newly internationalizing firms, but that these liabilities are reduced by the experiences and knowledge of the founders and top managers in these firms acquired prior to the inception of these firms.

The Influence of Multiple Knowledge Networks on Innovation in Foreign Operations

Although extant literature has long argued that firm embeddedness within knowledge networks increases innovation, we know much less about how interactions across multiple knowledge networks jointly influence learning and innovation outcomes within firms. This paper contributes to our understanding of global innovation in multinational corporations (MNCs) by exploring how competing tensions across parent, host-country, and third-country knowledge networks in terms of knowledge domain diversity and dominance, organizational bias, and knowledge relevance perceptions influence innovation outcomes. Empirical results from a comprehensive panel of U.S. MNCs reveal different “preferred” combinations of high and low embeddedness across parent, host-country, and third-country knowledge networks for incremental versus radical innovation outcomes, reflecting how competing tensions across knowledge networks can limit or enhance knowledge search for diverse knowledge and influence innovation outcomes in the foreign operations of MNCs.

The International Configurations of US Multinational Corporations

Abstract This paper explores how key insights from highly cited and well-used frameworks that describe the strategies and structures of MNCs are reflected in the international configurations of US MNCs. After reviewing existing frameworks that highlight different MNC choices regarding the integration, responsiveness, and dispersion of firm value chain activities, I perform a cluster analysis on a comprehensive and confidential database of US MNCs. The results reveal five configurations which both support the importance of key insights from existing frameworks while at the same time highlighting underexplored configuration characteristics, like the low levels of integration in US MNCs, the global sourcing arrangements for accessing foreign inputs and distribution, different approaches to regional expansion, and the limited geographic expansion of US MNCs pursuing product diversification. I argue that these underexplored characteristics suggest directions for future research to better reflect the international configuration choices of MNCs.

Going Global Early: Liabilities of Foreignness and Early Internationalizing Firms

In this paper, we examine how early internationalizing firms can overcome liabilities of foreignness and appear to “skip” stages in their international expansion. After performing a systematic literature review, we examine how founder, firm and country antecedent characteristics can facilitate early international expansion by firms. We conceptualize a set of firm characteristics that reduce liabilities of foreignness, but which are not commonly considered in the international business literature. Finally, we offer propositions that differentiate early internationalizing firms from more traditional multinational firms and that explain how firms can overcome liabilities of foreignness early in their life cycle.