Global Strategy Journal
- Publication date:
- Nbr. 8-2, May 2018
- Nbr. 8-1, February 2018
- Nbr. 7-4, November 2017
- Nbr. 7-3, August 2017
- Nbr. 7-2, May 2017
- Nbr. 7-1, February 2017
- Nbr. 6-4, November 2016
- Nbr. 6-3, August 2016
- Nbr. 6-2, May 2016
- Nbr. 6-1, February 2016
- Nbr. 5-4, November 2015
- Nbr. 5-3, August 2015
- Nbr. 5-2, May 2015
- Nbr. 5-1, February 2015
- Nbr. 4-4, November 2014
- Nbr. 4-3, August 2014
- Nbr. 4-2, May 2014
- Nbr. 4-1, February 2014
- Nbr. 3-4, November 2013
- Nbr. 3-3, August 2013
- Flexibility as firm value driver: Evidence from offshore outsourcing
Research Summary This article tests real options theory predictions that uncertainty and flexibility are key value drivers for offshore outsourcing moderated by switching costs. Examining firm‐specific and market data for outsourcing cases by U.S. firms, we find that the impact of market and environmental uncertainty and flexibility on outsourcing value is net positive and that it is greater for offshore than for domestic outsourcing. Outsourcing benefits are related to flexibility arising from growth options and moderated by switching costs underlying outsourcing activities, including loss of innovative capability and economic, institutional, and cross‐country cultural differences. Managerial Summary In the popular business literature, the “footloose” nature of outsourcing strategy characterized by an outsourcing firm's flexibility, as well as the ability in finding appropriate suppliers on a global basis, has often been touted as an important means of dealing with market uncertainty. However, the academic literature has not offered direct empirical support for the inherent value of such outsourcing strategies. Our study shows that firms tend to perform better financially when they have such outsourcing flexibility under uncertain market and environmental conditions, although this relationship may be somewhat weakened by potential loss of innovative capability and cultural and other differences in dealing with foreign suppliers.
- How to achieve benefits from diversity in international alliances: Mechanisms and cultural intelligence
Research Summary Despite interest in alliance management in the global strategy field, we have only limited insights into how firms can manage diversity‐related conflicts in international alliances. By referring to the conflict literature, our study introduces task discourse as a crucial mechanism allowing task conflict resolution. We further describe conflict resolution via socializing practices, including social events, joint workshops, and interorganizational teams. Socializing practices and discourse take advantage of cultural intelligence, empowering managers to interact efficiently in intercultural settings. Data on 148 international alliances in the photonics and biotechnology industries reveal that managerial cultural intelligence improves task discourse, thus enhancing performance, especially in young alliances. Socializing practices, however, decrease performance with increasing cultural distance and without sufficient levels of managerial cultural intelligence. Managerial Summary International alliances face a dilemma. Cross‐national differences offer valuable complementarities, but they can also spark a negative spiral of dysfunctional conflict. Our study shows that task discourse is an important mechanism for achieving advantages from the different perspectives offered by international alliances. Interestingly, our results further reveal that socializing practices including interorganizational teams, social events, and joint workshops do not per se have beneficial effects for international alliances. Putting people together who are unable to perform in intercultural settings is damaging to alliance performance. Our study indicates the specific conditions under which socializing practices have negative and positive effects and, thus, provokes a discussion about the appropriate application of these practices.
- Issue information ‐ TOC
- Issue information ‐ JIF
- Institutional determinants of ownership positions of foreign acquirers in Africa
Research summary Using unique features of the African context and blending institutional, hostage, and transaction cost theories, we address gaps in our understanding of institutional determinants of ownership position in cross‐border acquisitions (CBAs) in emerging countries. We focus on two traditional institutional determinants: Informal and formal institutional distances between the two firms’ home countries and two determinants that are particularly acute in the African context: the colonial ties between and fractionalization of the two firms’ home countries. We find colonial ties and uncertainty avoidance distance, an indicator of informal institutional distance, are negatively related to ownership position. Conversely, we show that formal institutional distance and the host country's fractionalization positively influence ownership levels, but the latter effect is weakened when acquirers come from more fractionalized home countries. Managerial summary We examine the effects of four institutional factors that influence organizational decision‐making in the African context: (a) its colonial history, (b) differences in informal cultural norms, (c) differences in formal regulatory structures, and (d) ethnic and linguistic diversity within a country on the percentage of equity ownership that foreign acquirers hold in African target firms. Results indicate that this equity position is lower when colonial ties and greater differences in uncertainty avoidance exist between the acquirer's home country and the target African country. Conversely, foreign acquirers’ equity ownership positions are higher when there are greater formal regulatory differences between the two countries and the host country is more ethnically and linguistically diverse, though the latter effect is reduced when the acquirer is from a home country that is also diverse.
- Network information and cross‐border M&A activities
Research Summary How information about social networks affects firms’ global expansion is an important but rarely investigated question. We argue that different sources of network information will affect a firm's investment activities in the global market, but their relative importance may vary. Moreover, the influence of network information can be bounded by the global trade network. The results from a sample of cross‐border merger and acquisition (M&A) activities conducted by U.S. publicly listed firms reveal that although M&A experience of both interlocking and joint venture partners affects the focal firm's global expansion, the effect of interlocking partners is more influential than joint venture partners. Meanwhile, when mutual trade dependence between countries is high, the positive effect of network information from board interlocks diminishes. Managerial Summary Firms are hesitant to engage in cross‐border M&As, because it is difficult for them to get information about local business practices and environmental idiosyncrasies. This study shows that firms can deal with this challenge by accessing relevant information from the M&A experience of interlocking partners and joint venture partners. The information generated from the M&A experience of interlocking partners is even more valuable and important than that of joint venture partners in shaping firms’ cross‐border M&A decisions. Moreover, the M&A experience of interlocking partners and joint venture partners is particularly valuable for firms contemplating M&A activities in a country with relatively fewer buyer‐seller exchange networks with their home country.
- Advanced service offshore outsourcing: Exploring the determinants of capability development in emerging market firms
Research Summary: We analyze the effect of offshored service task types on the development of capabilities in emerging market service provider firms. Using multiple case studies, we find that, dependent on task interdependent service types, implying different client interactions (firm‐external determinants), organizational capabilities are developed. More specifically, reciprocal task interdependent services generate human capital and management capabilities, while sequential task interdependent services generate organizational capital and management capabilities. Moreover, we find a relationship between the capabilities, where the deficient development of one capability can be mitigated by the development of another capability (firm‐internal determinants). Grounded in organization and service production theory, the article contributes to the thematic literature on service offshoring and the literature on organizational capabilities, with a particular focus on emerging market firms. Managerial Summary: Offshore outsourcing of advanced services is contributing to the development of capabilities for client firms, but is also expected to benefit service provider firms from emerging markets. Thus, we study how offshore outsourcing of services contributes to the development of these capabilities for service provider firms. We find that the characteristics of the services, which are causing different interactions with the client, help the firm develop a variety of capabilities. These capabilities affect the management, employees, and organization of service provider firms. Although the developed competencies are not a solution for all business development challenges of emerging market firms, the implications of this study could lead to competitive advantages for the firms if fully explored and exploited.
- The boundaries of the firm in global strategy
Research summary We briefly review the evolution in the analysis of the boundaries of the firm in global strategy. We explain how initial studies that argued that firm boundaries were driven by the minimization of transaction costs were later complemented by analyses that proposed that firm boundaries were driven by the development and use of resources to maximize value creation and capture. Studies of global strategy combine these two approaches and introduce the influence of location—both the home and host countries—as a third influence on boundary decisions. We encourage future studies to focus more deeply on the complexity, dynamics, and mechanisms of three themes: the consideration of all boundary options, the study of the entirety of the multinational, and the simultaneous consideration analysis of the characteristics of all the locations in which the multinational is active. These suggestions help better connect the three drivers of firm boundaries: transactions, resources, and locations. Managerial summary We briefly review the evolution in academic thinking regarding the scope of activities of a firm, that is, a firm's boundaries, in global strategy. We explain how initial studies that argued that firm boundaries are driven by a desire to reduce costs were complemented by analyses that proposed that firm boundaries are driven by a desire to increase value creation and capture. Studies of global strategy combine these two drivers and introduce the influence of the location of operation—the home and host countries—as a third influence on boundary decisions. We provide suggestions for future studies on how to incorporate the complexity, dynamics, and mechanisms of the complete array of methods to manage boundaries, the complete set of subsidiaries of the multinational, and the complete set of characteristics of the relevant locations.
- Boundary spanners and intra‐MNC knowledge sharing: The roles of controlled motivation and immediate organizational context
Research summary We examine the conditions under which boundary spanners positively contribute to intra‐MNC knowledge sharing. Specifically, we argue that the knowledge‐sharing behavior of boundary spanners should not be taken for granted, as it is affected by the individual's motivation to share knowledge and is contingent upon the immediate organizational context in which the individual is located. An analysis of data covering 482 individuals located in different business units of a Danish MNC confirms our arguments. Managerial summary Boundary spanners are employees who act as knowledge intermediaries between many individuals from within and outside their organizations. They are well connected internally and externally and share knowledge across MNC units to a greater extent than non‐boundary spanners. However, their contribution to knowledge sharing should not be taken for granted as it depends on their motivation and their immediate context.
- The pursuit of international opportunities in family firms: Generational differences and the role of knowledge‐based resources
Research Summary: We argue that willingness (attitude toward risk, return, and socioemotional wealth), ability (extent of control), and resource availability influence the internationalization of family firms. We hypothesize that the internationalization of family firms led by founding and later generation family members differs from the internationalization of nonfamily firms and from each other and that knowledge‐based resources moderate the relationship. Longitudinal analysis of 4,925 firm‐year observations of S&P 1500 manufacturing firms from 2002 to 2008 shows that compared to nonfamily firms, family firms run by founding (later generation) family members internationalize less (more). Knowledge resources increase (decrease) the internationalization of founder‐led (later generation) family firms. Overall, how family ownership influences firm behavior is likely to vary as much by its type as its amount. Managerial Summary: We explore the internationalization of family firms based on a sample of S&P 1500 manufacturing firms from 2002 to 2008. Compared to nonfamily firms, family firms run by founding family members internationalize less, and family firms run by later generation members internationalize more. However, as knowledge resources increase, the internationalization of founder‐led family firms increases, whereas the internationalization of firms led by later generation family members decreases. Therefore, our findings suggest that knowledge resources can facilitate or hamper international expansion in family firms, depending on the generation of family control. These findings underscore the role of goals, governance, and resources as important drivers of differences in internationalization between family and nonfamily firms, as well as of variations in internationalization among family firms.
- Flexibility as firm value driver: Evidence from offshore outsourcing
Research Summary This article tests real options theory predictions that uncertainty and flexibility are key value drivers for offshore outsourcing moderated by switching costs. Examining firm‐specific and market data for outsourcing cases by U.S. firms, we find that the impact of market and...
- How to achieve benefits from diversity in international alliances: Mechanisms and cultural intelligence
Research Summary Despite interest in alliance management in the global strategy field, we have only limited insights into how firms can manage diversity‐related conflicts in international alliances. By referring to the conflict literature, our study introduces task discourse as a crucial mechanism...
- The Effects of Home Country Political and Legal Institutions on Firms' Geographic Diversification Performance
Plain language summary Managers of multinational firms often view the political and legal environment as an important driver of international performance. However, this view is normally directed toward the host country rather than the political and legal environment within the home country. This...
- A Quasi‐experimental Approach to the Multinationality‐performance Relationship: An Application to Learning‐by‐exporting
Research summary This article introduces the propensity score matching method and the difference‐in‐differences approach as an innovative way to create a quasi‐experimental setting. By controlling for endogeneity, these methods more precisely capture the dynamic effect of strategy adoption. When...
- Attacked from Both Sides: A Dynamic Model of Multinational Corporations' Strategies for Protection of Their Property Rights
Multinationals operating in site‐specific industries face two types of opportunistic behavior. If they vertically integrate, host governments have incentives to change existing legislation challenging the firms' property rights. If they do not, they can be held up by business partners or lose...
- Complex Strategic Choices: A New Approach and Application to Foreign Firm Agglomeration
Research summary In this study, we introduce a new statistical technique to the field of strategy that accounts for complex interrelated decisions. The technique is meant for situations in which one strategic decision depends critically upon another—e.g., where companies must commit to one decision ...
- The Expansion of Emerging Economy Firms into Advanced Markets: The Influence of Intentional Path‐Breaking Change
Existing literature has investigated the drivers behind the expansion of emerging market firms into other emerging markets, but we are only beginning to understand how emerging market firms expand into more advanced markets. Grounding our arguments in institutional theory and the notions of...
- Foreign Subsidiary Exit from Africa: The Effects of Investment Purpose Diversity and Orientation
Research Summary This study considers the exit likelihood of foreign subsidiaries operating in Africa and identifies strategic orientations that can improve their chances of survival. We find that, on average, subsidiaries entering the African market have a greater exit likelihood than those...
- In the Right Place at the Right Time!: The Influence of Knowledge Governance Tools on Knowledge Transfer and Utilization in MNEs
This article examines the utilization of knowledge transferred between sending and receiving subsidiaries within multinational enterprises. A model was developed and tested on 169 specific knowledge transfer projects. The model explains the utilization of knowledge subject to transfer in terms of...
- Rethinking Ethnocentrism in International Business Research
Research summary For nearly five decades, international business (IB) research in general and the literature on organizational design and staffing of multinationals in particular have treated ethnocentrism mainly as an adverse attribute. Limited attention has been paid to the disciplines that...