Lorraine Eden

Strategy in Emerging Economies

Emerging economies are low-income, rapid-growth countries using economic liberalization as their primary engine of growth. They fall into two groups: developing countries in Asia, Latin America, Africa, and the Middle East and transition economies in the former Soviet Union and China. Private and public enterprises have had to develop unique strategies to cope with the broad scope and rapidity of economic and political change in emerging economies. This Special Research Forum on Emerging Economies examines strategy formulation and implementation by private and public enterprises in several different regional settings and from three primary theoretical perspectives: institutional theory, transaction cost economics, and the resource-based view of the firm. In this introduction, we show how different theoretical perspectives can provide useful insights into enterprise strategies in emerging economies. We discuss the special methodological as well as empirical challenges associated with doing research in emer...

The Impact of Corruption on Entry Strategy: Evidence from Telecommunication Projects in Emerging Economies

With globalization and the growth in emerging economies, multinational enterprises (MNEs) now frequently confront challenges associated with corrupt governments. Already, a growing body of research has demonstrated that corruption significantly reduces a countrys aggregate inflows of foreign direct investment through its effects on firm performance. We move the analysis of corruption from aggregate financial flows toward managerial theory and practice by examining how firms adjust their strategy for entering foreign markets in corrupt environments and how different types of corruption affect firms choices. Building on institutional theory, we predict that MNEs will respond to pervasive and arbitrary corruption in a host country by selecting particular types of equity and nonequity modes of entry. Using data on 220 telecommunications development projects in 64 emerging economies, we find that firms adapt to the pressures of corruption via short-term contracting and entry into joint ventures. We also find that the arbitrariness surrounding corrupt transactions has a significant impact on firms decisions, in addition to the overall level of corruption. In contrast to extant research, we show that MNEs use nonequity-entry modes or partnering as an adaptive strategy to participate in markets despite the presence of corruption.

What is the Shape of the Multinationality‐Performance Relationship?

Previous theoretical explanations and empirical analyses of the multinationality-performance relationship have produced mixed arguments and results. Linear and inverted U-shaped relationships have been theorized and confirmed empirically. Recent research has theorized that there is a three-stage, sigmoid relationship between multinationality and performance. We contribute to the debate by showing that the impact of multinationality depends on the time dimension incorporated in the performance measure; that is, the net benefits from multinationality are likely to be higher in the longer term. The results from our sample of US manufacturing multinationals indicate that there is a three-stage, sigmoid multinationality-performance relationship.

Insiders, outsiders and host country bargains

The obsolescing bargain (OB) model analyzes bargaining between a host country (HC) government and a multinational enterprise (MNE) at time of entry and the circumstances under which the original bargain does or does not erode over time. The model has traditionally focused on the dyadic relationship between the MNE and nation state. However, if a second wave of foreign multinationals should enter the HC, the relationship is no longer dyadic but trilateral: the host government, the first mover firms and the latecomers. What happens to the original and to subsequent MNE-state bargains? We incorporate recent insights on the liability of foreignness, transaction cost economics, multimarket competition and the resource-based view (RBV) into a theoretical model of sequential entry by rival multinationals. We find that liability of foreignness, firm rivalry and governance inseparability are key factors determining winners and losers in the sequential bargains. International institutions and home country governments are external forces that can also affect bargaining outcomes. We test our models propositions on a longitudinal case study of public policy decisions in the Canadian auto industry.

Standards across borders: crossborder diffusion of the arm's length standard in North America

The arm’s length standard is used by corporate income tax authorities to price international intracorporate transactions and allocate intracorporate income and expenses of multinational enterprises. In this paper, we examine the socio-historical evolution of transfer pricing regulation in North America. We develop a model of crossborder diAusion of standards, using institutional theory and the logic of embeddedness, that focuses on three components of crossborder diAusion: timing, motivation and form. Our model is then applied to the evolution and diAusion of the arm’s length standard within North America from 1917 to the present. # 2000 Elsevier Science Ltd. All rights reserved.

Governance in Multilateral R&D Alliances

In research and development (RD we also find that alliance scope moderates the relationship between the type of alliance and governance structure. Finally, we find that multilateral R&D alliances with predicted (aligned) governance structures perform better, in terms of alliance longevity, than those with misaligned structures.

Rethinking the O in Dunning’s OLI/Eclectic Paradigm

John Dunning introduced the OLI (Ownership‐Location‐Internalization) paradigm 37 years ago to explain the origin, level, pattern, and growth of MNEs’ offshore activities. Over the years, OLI has developed into perhaps the dominant paradigm in international business (IB) studies. However, the costs of being a paradigm are reflected in Dunning’s efforts to include an ever‐expanding array of IB theories and phenomena under the OLI “big tent.” In this paper, we focus specifically on the O in the OLI paradigm, tracing the history of Dunning’s ownership advantages. We argue that the modifications of O advantages over the past 37 years, as Dunning attempted to bring all IB phenomena and IB‐related theories under the OLI “big tent,” has had mixed results. However, we continue to believe that the typology of ownership advantages retains its relevance for IB scholars; that O advantages cannot and should not be subsumed within internalization advantages; and that O advantages are necessary for explaining the existen...

Multinationals in the Global Political Economy

Preface L.Eden & E.Potter - Notes on the Contributors - Thinking Globally, Acting Locally: Multinationals in the Global Political Economy L.Eden - Sovereignty at Bay Twenty Years After R.Vernon - Bringing the Firm back in: Multinationals in International Political Economy L.Eden - Governments and Multinational Enterprises: From Confrontation to Co-operation? J.H.Dunning - Drawing the Border for a Multinational Enterprise and a Nation State? A.M.Rugman - Big Business and the State S.Strange - TNCs in the Third World: Stability or Discontinuity? R.Kaplinsky - Multinationals and Developing Countries: Some Issues for Research S.Lall - The Competitiveness of Countries and Their Multinational Firms M.Blomstr m & R.E.Lipsey - No Entry: Sectoral Controls on Incoming Direct Investment in the Developed Countries R.T.Kudrle - Marketing Strategies to attract Foreign Investment L.T.Wells Jr & A.G.Wint - Bibliography - Indexes

Governance, Multinationals and Growth

Foreword by Peter J. Buckley Part I: Introduction Part II: Corporate Governance, Multinationals and Growth Part III: Free Trade, Multinationals and Growth Part IV: Public Governance, Multinationals and Growth Part V: Conclusions Index.

Revisiting Liability of Foreignness: Socio-Political Costs Facing Chinese Multinationals in the United States

This essential book analyzes the regulatory and operational challenges that foreign direct investors face in the United States, as well as the ways in which these challenges can be overcome.