Stephen Guisinger

Liability of foreignness to competitive advantage: How multinational enterprises cope with the international business environment

An expanded and holistic conceptualization of the liability of foreignness (LOF) is presented that goes beyond the traditional foreign subsidiary-local firm dyad in the host country. Taking the strategy process perspective, we contend that this liability is the aggregated effect of the firms interaction with all elements of the international business environment (IBE), not merely in the initial entry mode decisions but throughout its foreign operations. Viewing the antecedents and consequences of this liability holistically, we argue that accurate reading of the complex and volatile IBE, formulation of a compatible strategy and its effective implementation together contribute to good performance. As the resource-based perspective suggests the degree to which firms develop such tacit skills, differentially affects their performance. Firms that excel in these environment-reading skills and are agile enough to quickly adapt to its changes can transform this liability into a competitive advantage.

Seeking greener pastures: a theoretical and empirical investigation into the changing trend of foreign direct investment flows in response to institutional and strategic factors

A generic theoretical model is proposed that provides a holistic conceptualization of the phenomenon of changing trend of FDI flows. Integrating both institutional and strategic factors, a rationale for such a change is provided, and the circumstances under which future shifts might take place are identified. A collection of criteria and incentives that various host governments and their agencies must provide to attract FDI are outlined. Several propositions that lead to empirically testable hypotheses are developed from this model. Statistical evidence is then provided of a shift in FDI flows, and the change in their determinants, by empirically analyzing investment by US multinational enterprises into Western Europe and Asia over the 20-year period, 1981-2000.

Earnings, rates of return to education and the earnings distribution in Pakistan

Abstract Utilizing data from a survey of 1000 households in Rawalpindi, this study presents estimates of the rate of return to schooling and differences in these rates of return by schooling level and sector of employment. The major finding reported is that the rate of return to schooling in one of Pakistans major urban areas is low, both in relation to the rate of return on physical capital and in relation to the rates of return to schooling in other developing countries. These low rates of return appear to be a result of a conscious government policy which drastically compressed the skill-wage structure.

Pakistan's informal sector

This study reviews the main features of Pakistans informal sector. The data on the informal sector, compiled from censuses and sample surveys in one major city (Rawalpindi), suggest that both real wages and employment have grown in the informal sector. The seeming paradox of real wage growth in a labor surplus economy is explained by real wage growth in both agriculture and large‐scale manufacturing, both of which were made possible by Pakistans growth performance during the 1960s. The differences in wages between the formal and informal sector, after adjusting for age and education, are quite small, a reflection of high labor mobility between the two sectors.

Será o ambiente internacional de negócios o contexto efetivo para a pesquisa em negócios internacionais

The International Business Environment (IBE) has been argued to be the essential context for international business (IB) studies and the distinguishing factor from other management studies and studies of large enterprises. Two content analysis show that many papers published in top tier IB journals either lack reference to any dimension of the IBE ortend to be uni-or bi-dimensional when addressing the IBE; it is not a surprise that the cultural dimension is the most often used. We suggest that: (a) there is need to developed more uni-and multi-dimensional environmental constructs; (b) a more holistic view of the IBE provides richer insights on the actual complexity underlying IB research. Future studies that provide more comprehensive models of the IBE that overcome the usual broad classifications of the international environment as undefined and uncontrollable factors are warranted to advance conceptual and empirical research.

Long-term trends in income distribution in Pakistan

Income distribution trends in West Pakistan during the 1960s and 1970s are examined in relation to the assumption that as countries approach economic maturity, distribution begins to improve. The experience in Pakistan appears to be initial improvement followed by an apparent worsening of income distribution. This trend seems linked to specific country government policies that influenced growth during the period, as well as to real wages. In the 1960s, Pakistan adopted a set of policies that provided for rapid, labor-using growth; minimal distortions in the labor market; and slowing the rate of labor-displacing mechanization. These policies seem to have produced increased output without worsening income differentials. Since 1970, changes have occurred in both the economic environment and government policies that have the potential of reversing this favorable trend. However, the conclusion that income distribution has worsened is a tentative one based on fragmentary data. The major lesson to be learned from the Pakistan experience is that growth and equity are not necessarily inimical objectives in the short term; they merely require an appropriate mix. Economic data are included. 13 references.

Taxation of U.S. foreign direct investment abroad: Effective tax rates and tax policy competition in developed and developing countries

Abstract The study tests whether tax policy is effective in attracting foreign direct investment and examines differences in tax policies between developed and developing countries. The study found that, during the 1968–1982 period, a sample of 17 developed countries, on average, had high effective tax rates (compared to the developing countries), appeared to compete vigorously through tax policies, and had tax rates that tended to converge over time. During the same period, a sample of 48 developing countries exhibited divergent tax behavior within the group, suggesting less competition. The study also found that the tax sensitivity of foreign direct investment is significantly greater within the developed country group than within the developing country group. These findings have implications for both governments and multinational corporations.

How Well Do Foreign Firms Compete in the United States

Our study explored the comparative rate of business failures between foreign-controlled firms in the U.S. and domestically owned firms. The results show that both in aggregate and by major industry groups, the business failure rate of domestically owned firsm. Lower failure rates could be due to foreign firms utilizing their specifid ownership advantages to compete successfully in the United States, but there could be other reasons as well. Because of the lower failure rate, many other foreign firms with specific ownership advantages should consider investing in the U.S., where our study suggests they will be able to compete effectively within U.S. firms. Thus our study provides empirical support for corporate policies of globalization.

The New Economic Analysis of Multinationals

In this seminal book, a distinguished group of experts pinpoint and rigorously analyse central topics in international business research. This volume will become a major reference tool for understanding the economics of multinational enterprise. The emphasis throughout is on a new dynamic research agenda, for theory, for empirical research and for public policy.

Harmonizing investment incentives in the APEC process

Security of access to markets is critically important in international trade in goods and services. Security is also critically important to foreign direct investment. With the “globalization” of production, international attention has been turning to improving the institutional environment for FDI, especially in developing economies. In APEC, the focus has been on principles and a non-binding code, but in due course the focus will have to shift to a binding agreement with rules that instill the confidence needed for providers of capital to invest in the major infrastructure projects that will make a difference in East Asia’s development. The focus here is on limits on the level of investment incentives that governments can use to attract foreign investors.