Paul Kalfadellis

Psychic distance and environment: impact on increased resource commitment

Purpose – The purpose of this study is to provide a theoretical driven model, explaining the interaction between psychic distance and environment on increased (subsequent) resource commitment decisions made by firms in their internationalization process. Increasingly, contrary to the Uppsala internationalization process (IP) model, firms are engaging in direct investment, rather than exporting as an initial step into overseas markets. Yet, it remains unclear how psychic distance affects firms engaged in increased resource commitment, especially in the initial phase of their international expansion when uncertainty is higher.Design/methodology/approach – Building theory by integrating two key theories of internationalisation (IP model and eclectic paradigm), the paper explains increased resource commitment. Comparing firm types, the study also fills the research gap of recognising multinational enterprises (MNEs) as heterogeneous in their internationalization experience. Psychic distance and environment ar...

‘After-Care’ Service Provision and Repeat Investment

Inward investment promotion agencies (IIPAs) need to expend effort and resources in nurturing and ‘looking after’ established multinational enterprise (MNE) operations within their location. Location experience considerations suggest that these are the firms likely to engage in repeat investment. IIPA efforts in winning repeat investment through the provision of ‘after-care’ service has become an integral part of ‘looking after’, embedding and upgrading existing MNE operations in a location. MNE subsidiaries, by signalling to headquarters, play a significant role in initiating investment in the development and expansion of its own resources and capabilities. In taking a subsidiary perspective, this study examines the perceptions of 356 foreign MNE subsidiaries, on the provision of ‘after-care’ service by Australian governments and their IIPAs. Drawing on the resource-based view (RBV) of the firm, the study found discernible differences among the perceptions of foreign subsidiaries operating in Australia depending upon their size and years of operation. The results suggest that if governments and their IIPAs are to embed and potentially upgrade foreign subsidiaries within their domain, they need to consider the different ‘after-care’ needs of foreign subsidiaries, based on size and age. Larger and older subsidiaries were viewed more favourably compared to small- and medium-sized enterprises (SMEs) and more recently established subsidiaries with regard to the provision of ‘after-care’ services. Theoretically, the results confirmed the RBV of the firm that argues that larger firms are able to exploit their size to gain more resources. Thus, a policy of discrimination in the provision of ‘after-care’ service to help support SMEs and recently established ‘younger’ foreign MNEs to engage in future upgrades of subsidiary operations needs to be supported. This will ensure a more sustained competitiveness of locational advantages in Australia across a range of industries.

Location Advantages and Repeat Investment in Australia: A Two-State Comparison

Kalfadellis P. Location advantages and repeat investment in Australia: a two-state comparison, Regional Studies. Repeat investment is increasingly important for governments seeking to retain and embed existing foreign subsidiaries within their domains. Identifying the location advantages that predict the repeat investment behaviour of foreign subsidiaries although important has not been studied in any systematic manner. Using a sample of 356 foreign subsidiaries operating in Australia, a multiple regression model is used to test the relationship between the location advantages and repeat investment across both national (Australia) and regional (New South Wales and Victoria) spatial domains. The different location advantages found to be predictive of repeat investment suggest that reliance in the literature on location being synonymous with the national domain is inadequate. The findings highlight the need for domain-specific policy responses if governments are to encourage repeat investment at the regional level.

Established foreign subsidiaries and the relationship between: the environment, satisfaction and investment intentions

This study identified the environmental factors that influence established foreign subsidiaries operating in Australia. In seeking to examine and explain subsidiary development in a location this study sought to test the relationship between the identified environmental factors, satisfaction and future investment intentions. Based on a sample of 356 foreign subsidiaries operating in Australia, a mediated regression model was used to test the relationship. The results showed that overall satisfaction, national institutional environment, and local investment image had a positive predictive effect, while input costs and small market had a negative predictive effect on the relationship with investment intentions. Overall satisfaction as a mediator on the relationship between these factors and investment intentionsindicated that national institutional environment, and local investment image had no additional effect on investment intentions beyond their impact on overall satisfaction.