decentralized and concentrated investments in china and the performance of taiwanese listed electronic companies abstractever since china surpassed taiwan to become the largest exporter of electronic products dependence between the two sides has deepened which prompts taiwanese companies to go public in china this study conducted the data envelopment analysis dea and regression analysis to analyse the impacts of the depth and breadth of investments in china on the performance of taiwanese listed electronic companies the empirical results show that the breath of the investments in china has a positive correlation with the performance of taiwanese companies while the depth of investments in china has a negative and significant effect on the performances due to the companies lack of know how which leads to a high learning cost in summary companies should strategize their decentralized and concentrated investments in china

control and performance of international joint ventures control is a critical concept for successful management and performance of international joint ventures ijvs this paper reviews and synthesizes prior studies addressing the conceptualization and operationalization of control within ijvs as well as the ijv control performance relationship the paper also presents a new conceptualization of ijv control as well as a conceptual frame work for studying control of ijvs

does trade credit play a signalling role some evidence from smes microdata using micro data on small and medium sized enterprises this paper empirically investigates the signalling hypothesis formulated on the role of trade credit biais and gollier in rev financ stud 10 903 937 1997 burkart and ellingsen in am econ rev 94 569 590 2004 the research method adopted allows evaluation of the impact of suppliers credit on bank debt accounting for the strength duration of bank firm relationships our main finding is that trade credit seems to have an information content for banks especially when the latter do not dispose of adequate soft information on firms which is likely the case at the beginning stages of bank firm relationships an implication of our results is that the availability of suppliers credit might be crucial to foster access to institutional funding for new firms entering the market our evidence also suggests that banks seem to consider suppliers a reliable source of information on firms financial conditions even after several years of lending relationships

a hidden markov model of credit quality abstract this paper presents a hidden markov model of credit quality dynamics and highlights the use of filtering based estimation methods for models of this kind we suppose that the markov chain governing the true credit quality evolution is hidden in noisy or incomplete observations represented by posted credit ratings parameters of the model namely credit transition probabilities are estimated using the em algorithm filtering methods provide recursive updates of optimal estimates so the model is self calibrating the estimation procedure is illustrated with an application to a data set of standard poor s credit ratings

trade credit bank lending and monetary policy transmission this paper investigates the role of trade credit in the transmission of monetary policy most models of the transmission mechanism allow the firm to access only financial markets or bank lending according to some net worth criterion in our model we introduce trade credit as an additional source of funding we predict that when monetary policy tightens there will be a reduction in market and bank lending and an increase in trade credit this is confirmed with an empirical investigation of 16 000 manufacturing firms

the location of activities of manufacturing multinationals in the asia pacific analysis of survey results from 440 manufacturing multinationals active in the asia pacific shows that there are significant differences in the patterns of location decisions for different corporate activities in the region analysis of a random effects mixed model of activity location suggests relationships between a variety of location and firm attributes and foreign investment in different activities and shows that the patterns of significance among the explanatory variables differ across different activities the results are consistent with the view that firm activities along with resources and knowledge should be viewed as fundamental components of the multinational firm

three lenses on the multinational enterprise politics corruption and corporate social responsibility scholars who analyze multinational enterprises mnes recognize the complex relationship between international business ib and society however compared with other ib topics research on politics corruption and corporate social responsibility three lenses on the mne remains somewhat embryonic with unresolved issues regarding frameworks measurement methods and theory this presents unique opportunities for integration and extension of disciplinary perspectives which we explore in this article we provide an introduction to potential linkages across these three lenses an agenda for additional theoretical and empirical research and a review of the papers in the jibs focused issue

patterns of control in u s uk and european multinational corporations this paper examines the type and level of control exercised by the parent headquarters of 50 u s uk and european multinational corporations over their foreign subsidiaries patterns of control in the 3 national groups differ in significant ways and these differences seem to have important implications for other characteristics of a company s organization design and managerial style

multinational parent companies influence over human resource decisions of affiliates u s firms in mexico this study provides empirical evidence for the relationship between the degree of influence u s parent companies have over the human resource decisions of their mexican affiliates and the affiliates resource dependencies on the parent company both wholly owned and joint venture affiliates are examined resource dependence was the factor most closely related to parent influence over affiliate human resource decisions the importance of an affiliate to a parent company the nationality of affiliate managers and the type of ownership arrangements were also found to affect parent influence but to lesser extents than resource dependencies

a comparative analysis of current credit risk models the new bis 1998 capital requirements for market risks allows banks to use internal models to assess regulatory capital related to both general market risk and credit risk for their trading book this paper reviews the current proposed industry sponsored credit value at risk methodologies first the credit migration approach as proposed by jp morgan with creditmetrics is based on the probability of moving from one credit quality to another including default within a given time horizon second the option pricing or structural approach as initiated by kmv and which is based on the asset value model originally proposed by merton merton r 1974 journal of finance 28 449 470 in this model the default process is endogenous and relates to the capital structure of the firm default occurs when the value of the firm s assets falls below some critical level third the actuarial approach as proposed by credit suisse financial products csfp with creditrisk and which only focuses on default default for individual bonds or loans is assumed to follow an exogenous poisson process finally mckinsey proposes creditportfolioview which is a discrete time multi period model where default probabilities are conditional on the macro variables like unemployment the level of interest rates the growth rate in the economy which to a large extent drive the credit cycle in the economy 2000 elsevier science b v all rights reserved

the management of multinational r d a neglected topic in international business research despite the growing involvement of multinational firms in foreign based r d during the past fifteen years little research has been done on why and how firms internationalize their r d and what effects it might have on firm competitiveness the present paper calls attention to this neglect and seeks to advance the management of multinational r d as an area of study for international business scholars to this end the paper first examines the key contributing factors to increased foreign r d investments among multinationals it then reviews the research literature to find out what we presently know about the management of multinational r d finally a research agenda is proposed to provide a foundation and stimulus for future investigations seven research directions are recommended with an emphasis on interdisciplinary inquiry and a focus on issues that have both theoretical and practical significance

bayesian analysis of structural credit risk models with microstructure noises in this paper a markov chain monte carlo mcmc technique is developed for the bayesian analysis of structural credit risk models with microstructure noises the technique is based on the general bayesian approach with posterior computations performed by gibbs sampling simulations from the markov chain whose stationary distribution converges to the posterior distribution enable exact finite sample inferences of model parameters the exact inferences can easily be extended to latent state variables and any nonlinear transformation of state variables and parameters facilitating practical credit risk applications in addition the comparison of alternative models can be based on deviance information criterion dic which is straightforwardly obtained from the mcmc output the method is implemented on the basic structural credit risk model with pure microstructure noises and some more general specifications using daily equity data from us and emerging markets we find empirical evidence that microstructure noises are positively correlated with the firm values in emerging markets

the entry mode choice of mnes an evolutionary approach abstract the literature on foreign direct investment fdi has recently analysed the nature of the firm s entry mode choice in a foreign market particularly the choice between a joint venture and a wholly owned subsidiary the paper aims at providing further empirical evidence on the influence of some key variables in explaining it the theoretical framework relates to the resource based view of the firm and to the more recent competence based theory it focuses on the concept of the firm as a collection of productive resources and assets built through internal learning processes in the form of evolutionary experimentation the inability of the firm to build internally all the needed knowledge and competencies forces it to acquire them outside influencing the growth strategy of the firm as resources and complementary assets are spread out the firm has to deal with constraints which become more crucial when the firm enters into unfamiliar markets and areas of activity in particular when deciding about the entry mode on foreign markets the firm has to face transaction costs concerning actors and potential partners and their opportunism and costs related to the need for acquiring information about new institutional environments and their working according to this view the resort to co operative solutions and joint ventures allows firms to reduce costs and uncertainty related to foreign markets and rises if technological opportunities tacit skills and competencies constitute an important source of competitive advantage for the firm an empirical analysis with reference to a representative sample of fdi undertaken by italian firms in mining and manufacturing industries over the period 1986 1993 has been developed in order to test the hypotheses

bargaining power ownership and profitability of transnational corporations in developing countries as the bargaining power of the transnational corporations tncs in the sample increased relative to the bargaining power of the host country and as the desire of the tncs for a high level of equity ownership increased the percent equity ownership of the tncs in their subsidiaries increased the relationship between percent equity ownership and subsidiary success from the tncs viewpoint however was j shaped high and low levels of equity ownership were associated with high levels of success control of critical operational variables by the tnc was directly related to success

subsidiary size and the level of subsidiary autonomy in multinational corporations a quadratic model investigation of australian subsidiaries we investigate the relationship between subsidiary size and subsidiary autonomy in multinational corporations mncs and conclude that a quadratic inverted u shaped model is the best fit to our data founding our arguments in resource dependence theory we propose that while the subsidiary is relatively small increasing subsidiary size will correlate with increasing resources in the subsidiary and a consequent increase in subsidiary autonomy this positive linear relationship persists until an inflection point is reached and subsidiary autonomy begins to decline we argue that this is due to increasing subsidiary size bringing increasing coordination complexity a need for greater inputs of managerial experience and expertise and growing interdependence between the subsidiary and the rest of the corporation employing a sample of 313 australian subsidiaries of mostly us uk european and japanese mncs we use a three step hierarchical regression to investigate controls only linear and quadratic effects of subsidiary size on subsidiary autonomy the quadratic inverted u model supports and extends hedlund s 1981 proposition a post hoc investigation suggested that there might be value in exploring a sinusoidal relationship between size and autonomy

autonomy and procedural justice a framework for evaluating subsidiary strategy using the well supported dimensions of autonomy and procedural justice a four quadrant model of subsidiary strategy is proposed and a four part typology hypothesized partner collaborator militant and vassal subsidiaries a clustering process is used to develop a four group taxonomy that corresponds with the induced model the four groups of subsidiaries are analysed across seven alternative strategic dimensions integration responsiveness coordination configuration market scope product scope and value added scope the external and internal validity of the framework is confirmed and its utility discussed in terms of subsidiary s movement from one strategy state to another

the choice between joint venture and wholly owned subsidiary an institutional perspective the study of foreign entry mode choice has been based almost exclusively on transaction cost theory this theory focuses mainly on the impacts of firm and industry specific factors on the choice of entry mode taking the effects of country specific contextual factors as constant or less important in contrast the institutional perspective emphasizes the importance of the influence of both institutional forces embedded in national environments and decision makers cognitive constraints on the founding conditions of new ventures still this theoretical perspective has yet to provide insights into how institutional factors influence the choice of foreign entry mode the primary goal of the present study is to provide a unifying theoretical framework to examine this relationship we synthesize transaction cost and institutional perspectives to analyze a sample of 364 japanese overseas subsidiaries our results support the notion that institutional theory provides incremental explanatory power of foreign entry mode choice in addition to transaction cost theory in particular we found that multinational enterprises tend to conform to the regulative settings of the host country environment the normative pressures imposed by the local people and the cognitive mindsets as bounded by counterparts and multinational enterprises own entry patterns when making foreign entry mode choices

prior conditions and early international commitment the mediating role of domestic mindset our study investigates why some firms engage in low international commitments such as exports in the early phases of internationalization whereas others leapfrog the internationalization process and start with high international commitments in the form of foreign direct investment fdi process models of internationalization propose that firms start with low commitment activities and gradually increase their commitments to international markets however recent empirical evidence has shown that many firms make high international commitments from the start our findings suggest that domestic resources and competitive action propensity affect early international commitments indirectly through domestic mindsets a domestic mindset refers to the knowledge structures of the top management team prior to starting international activities based on their managerial experience and learning in domestic markets our results suggest that knowledge and learning gained in domestic markets through diverse resource and competitive activities may be crucial in early international commitments

risk assessment for credit portfolios a coupled markov chain model abstract credit portfolios as for instance collateralized debt obligations cdo s consist of credits that are heterogeneous both with respect to their ratings and the involved industry sectors estimates for the transition probabilities for different rating classes are well known and documented we develop a markov chain model which uses the given transition probability matrix as the marginal law but introduces correlation coefficients within and between industry sectors and between rating classes for the joint law of migration of all components of the portfolio we have found a generating function for the one step joint distribution of all assets having non default credit ratings and a generating function of the loss distribution the numerical simulations presented here verify that the average number of defaults is not affected by the correlation coefficients but the percentiles of the number of defaults are heavily dependent upon them in particular for strongly correlated assets the distribution of the number of defaults follows a cascade pattern nesting in non overlapping intervals as a result the probability of a large number of defaults is higher for correlated assets than for non correlated ones

use of minority and 50 50 joint ventures by united states multinationals during the 1970s the interaction of host country policies corporate strategies this article examines geographical sectoral and corporate trends in the use of minority and 50 50 joint ventures by u s multinational manufacturing and mining firms in less developed countries ldcs during the 1970s it is based primarily on data found in the harvard multinational enterprise data base as updated through the mid 1970s and supplemented with corporate performance data for the 1975 1980 period from a new international competitive analysis ica database developed with support from the general electric foundation

financial development bank discrimination and trade credit non state owned firms in china grow tremendously with limited support from banks this provides a unique setting to test how firms in a country with poorly developed financial institutions fund their prosperous growth opportunities this paper compares the use of an important non formal financial channel trade credit between state and non state owned firms in china we find that compared to state owned firms non state owned firms use more trade credit we further show that this higher usage is primarily for financing rather than transactional purposes the results suggest that in a country with a poorly developed formal financial sector firms can support their growth through non formal financial channels that largely rely on implicit contractual relation

choice of foreign market entry mode impact of ownership location and internalization factors firms interested in servicing foreign markets face a difficult decision with regards to the choice of an entry mode the options available to a firm include exporting licensing joint venture and sole venture several factors that determine the choice of a specific foreign market entry mode have been identified in previous literature these factors can be classified into three categories ownership advantages of a firm location advantages of a market and internalization advantages of integrating transactions this study examines the independent and joint influences of these factors on the choice of an entry mode multinomial logistic regression model is employed to test the hypothesized effects

an empirical analysis and extension of the bartlett and ghoshal typology of multinational companies this study offers an empirical test and extension of the bartlett and ghoshal typology of multinational companies mncs a three fold typology of multinational companies global multidomestic and transnational is developed from the literature this typology is tested using data from 166 subsidiaries of 37 mncs headquartered in 9 different countries subsidiaries in the three types of mncs are shown to differ significantly in aspects of interdependence and local responsiveness

credible enticements can host governments tailor multinational firms organizations to suit national objectives abstract this article discusses the impact of host government policy inconsistency on multinational corporations relationships with local suppliers that benefit from public funding empirical findings suggest that such relationships suffer from transactions cost disadvantages due to concerns that unexpected losses of funding may cause the suppliers to demand new contracts the findings reflect statistical tests on a structural equation latent variable model using data from a survey of 111 affiliates of mncs operating in 36 countries

extending the bargaining power model explaining bargaining outcomes among nations mnes and ngos participants in international bargaining include different types nation states mnes ngos and multilateral organizations and different numbers of these actors our theoretical contribution is to extend the bargaining power paradigm with a framework that models bargaining in this complex environment as a network the configuration of supports and constraints among all participating actors in the bargaining environment is captured in the structure of the network antecedents of an actor s bargaining influence in the network include the actor s basis of power network position bargaining outcome preferences and motivation to influence bargaining the network bargaining power nbp model uses network theory to build upon and integrate insights from previous literature in a way that allows us to simultaneously apply these different insights to explain bargaining outcomes these insights include effects of coalitions strategies of less powerful actors leveraging more powerful allies integration of international and domestic politics and applicability to mne related issues beyond fdi finally we illustrate nbp in a scenario of privatized utilities in the dominican republic in which the bargaining power outcome predicted by nbp differs from that of the canonical bargaining power perspective

the integration of subsidiary political activities in multinational corporations just as the competitive activities of mnc subsidiaries exhibit differentiation as well as integration so might mnc political activities this paper combines the literatures on international business government interactions and on multinational corporations with resource dependence theory as a foundation we develop and test hypotheses on factors that might influence the degree to which subsidiary political activities are integrated with affiliated organizations we find that subsidiary strategic integration and the economic integration of the host country significantly influence integration of subsidiary political activities

institutional theory and the cross national transfer of employment policy the case of workforce diversity in us multinationals this paper uses a comparative institutionalist approach combined with a power interests perspective to examine the processes whereby diversity policy is internationalised by us multinational companies it argues that the process of policy transfer to uk subsidiaries is complicated by incomplete and contested institutionalisation of diversity within the us itself and by differing conceptions of diversity between the us and the uk the ability of actors within the uk subsidiaries to mobilise and deploy specific power resources allows them to resist the full implementation of corporate diversity policy leading to a range of compromise accommodations it is argued that the findings have more general implications for analysing the transfer of hr practices between national business systems

joint venture formation of very large multinational firms large firms differ from smaller firms in many aspects in this research note we investigate the relationship between the size of firm and the characteristics of equity joint ventures ejvs empirically we found that very large firms are more likely to have a higher equity stake in their ejvs seek alignment with other foreign firms engage in global industries and invest in large scale ejvs than smaller firms they are also less affected by the risk conditions of the host country empirical testing is based on a sample of 1 298 foreign ejvs in the people s republic of china between 1981 and 1998 interesting differences also exist among firms that are based in the u s japan and europe

the impact of journals and authors on international business research a citational analysis of jibs articles in this paper we use citational analysis to examine the influence of individuals and disciplines on international business research we collected citational data over the ten year period 1984 to 1993 from every issue of the journal of international business studies we found that management economics marketing and finance disciplines have had significant influence on international business research and identified researchers such as dunning porter vernon casson rugman and hofstede as having made significant contributions to international business research

host country policies and mne management control in ijvs evidence from china in international joint ventures ijvs partner firms exert three types of management control output process and social since management control critically influences ijv success it is essential to understand what factors drive the development of the control system prior studies have focused mainly on ijvs internal conditions and have largely neglected external institutional influences on ijv control in this study we explore how host country policies affect mne partners control over their ijvs using a sample of ijvs in china we find that mne partners tend to exercise less output and process control when minority equity restriction is present greater process control when they receive government incentives and less social control when they are required to partner with state owned enterprises in contrast the results of a post hoc analysis show that local partners control activities are not significantly influenced by these policies our findings provide new insights into ijv management by demonstrating the impacts of regulatory institutions on partners control activities

foreign direct investment and host country policies a rationale for using ownership restrictions abstract this paper examines host governments motivation for restricting ownership shares of multinational firms mnfs in foreign direct investment fdi projects an mnf with a productivity advantage is willing to invest in a host country the host government wants to capture the mnf s surplus yet cannot observe it due to the mnf s private information about its firm specific advantage in contrast a joint venture jv partner might observe this surplus depending on its ownership share the host government can alleviate its informational constraints by using ownership restrictions to force a jv this calls into question the wisdom of calls for liberalizing fdi flows by the wholesale elimination of domestic jv requirements we show that the optimal mechanism involves ownership restrictions that decrease as the size of the mnf s firm specific advantage increases

trade credit and credit rationing asymmetric information between banks and firms can preclude financing of valuable projects trade credit alleviates this problem by incorporating in the lending relation the private information held by suppliers about their customers incentive compatibility conditions prevent collusion between two of the agents e g the buyer and the seller against the third e g the bank consistent with the empirical findings of petersen and rajan 1995 firms without relationships with banks resort more to trade credit and sellers with greater ability to generate cash lows provide more trade credit finally small firms react to monetary contractions by using trade credit consistent with the empirical results of nilsen 1994 article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

performance and survival of joint ventures with non conventional ownership structures the international joint venture jv literature has focused on two parent jvs formed between one foreign and one local firm yet other types of jvs exist this paper identifies four distinct forms of jvs based on the jv partners nationality and equity affiliation these are i jvs that are formed between affiliated home country based firms ii jvs that are formed between unaffiliated home country based firmsl iii jvs that are formed between home country based and local firms and iv jvs that are formed between home country and third country based firms our analysis of 737 japanese jvs in asia demonstrates that the conventionally assumed form of jv represented only 30 percent of the total further each of the four jv forms significantly differed in terms of incidence performance and survival likelihood

trade credit and the bank lending channel the bank lending channel theory posits that during monetary contractions banks restrict some firms loans thus reducing their desired investment independently of interest rates previous research finds small firms reduce while large firms accelerate loan growth we find that small firms increase trade credit a substitute credit indicating a strong loan demand it supports the bank lending channel they do not voluntarily cut bank loans since they increase a less desirable alternative using trade credit is propitious since unlike commercial paper investigated by previous researchers it is widely used by the small firms suffering the loan decline surprisingly we also find large firms increase trade credit a puzzle since they are typically assumed to have wide access to other credit using individual manufacturing firm data we find the reasons large firms use trade credit are financial in nature those without a bond rating increase trade credit that is without access to open market credit as relatively few firms have this mark of quality it implies that more firms are affected by credit constraints than previously believed

managing foreign subsidiaries agents of headquarters or an interdependent network in this study two different theoretical perspectives are used to develop sets of hypotheses regarding the mechanisms used to manage foreign subsidiaries of multinational corporations first agency theory serves as the basis for a model that predicts the use of monitoring mechanisms and incentive compensation then it is argued that these mechanisms are insufficient for managing subsidiaries characterized by high levels of intra firm international interdependence the management of which is critical to many of today s complex global firms a second set of hypotheses is argued linking international interdependence to several social control mechanisms primary and secondary data from u s based multinational corporations were used to test both sets of hypotheses the results indicate that agency theory although a useful foundation for studies of control within mncs is limited in its ability to explain fully the phenomenon of foreign subsidiary control however the model based on intra firm interdependence had much greater predictive ability copyright 2000 john wiley sons ltd

trade credit and productive efficiency in developing countries abstract in developing countries credit shortages are often so severe as to impact a firm s day to day production decisions using firm level data from five african countries i show supplier credit is positively correlated with capacity utilization the result continues to hold when credit access is instrumented using supplier characteristics i claim that this is because firms lacking credit likely face inventory shortages leading to lower rates of capacity utilization this explanation yields several further predictions that are supported by the data there is a positive relationship between supplier credit and inventory holdings moreover raw materials stockouts are positively correlated with capacity utilization particularly in inventory intensive industries

in kind finance a theory of trade credit it is typically less profitable for an opportunistic borrower to divert inputs than to divert cash therefore suppliers may lend more liberally than banks this simple argument is at the core of our contract theoretic model of trade credit in competitive markets the model implies that trade credit and bank credit can be either complements or substitutes among other things the model explains why trade credit has short maturity why trade credit is more prevalent in less developed credit markets and why accounts payable of large unrated firms are more countercyclical than those of small firms

knowledge diffusion market segmentation and technological catch up the case of the telecommunication industry in china abstract this paper examines the growth of technological capability in the telecommunication industry in china we apply a modified version of lee and lim s lee k lim c 2001 the technological regimes catch up and leapfrogging findings from the korean industries research policy vol 30 model of technological learning and catching up using the three cases of the shanghai bell the cit led r d consortium and indigenous companies such as huawei we analyze how the catching up in the telecommunication industry occurred we find that the important factors in the catch up are the strategy of trading market for technology the knowledge diffusion from shanghai bell both to the r d consortium and to huawei and industrial promotion by the government as a condition for successful catch up the paper points out that the technological regime of the telephone switches is featured by a more predictable technological trajectory and a lower cumulativeness these conditions and strategies helped the chinese firms to achieve a stage skipping catch up namely by skipping the stage of analogue electronic switches to jump to digital electronic switches

social knowledge as a control system a proposition and evidence from the japanese fdi behavior building upon the concept of clans this paper introduces the value of social knowledge as a control mechanism available for an mnc to manage its foreign subsidiaries social knowledge is defined as one s ability to understand and predict others general patterns of behavior the hypotheses are empirically tested with japanese fdi data into four host countries the united states singapore taiwan and korea the results offer broad support for the proposition that for mncs with social knowledge the need to resort to ownership for control purposes is reduced

the importance and subtlety of credit rating migration abstract bond ratings are usually first assigned by rating agencies to public debt at the time of issuance and are periodically reviewed by the rating companies if deemed warranted changes in ratings are assigned after the review a change in a rating reflects the agency s assessment that the company s credit quality has improved upgrade or deteriorated downgrade a coincident effect in some proximity to the date of the rating change is a change in the price of the issue this article reports on an in depth investigation of the expected ratings changes drift over time our analysis compares rating changes from the two major agencies moody s and s p over the period 1970 1996 for the first time results from several studies which have documented and analyzed these data patterns are contrasted depending upon which study one uses the results and implications can be very different we expect that the findings will have implications for such diverse practitioners as bond investors who concentrate on any or all segments of the corporate bond market eg high yield bond and crossover investors mark to market analysts and traders in the new and growing market for credit risk derivatives and for the many analysts who properly view that credit quality assessment involves the entire spectrum of possible outcomes not just default a follow up study will analyze in greater depth two critical characteristics of the rating drift phenomenon these are unexpected as well as expected rating migration patterns and also the implied impact on the price of the fixed income instrument

testing the bargaining hypothesis in the manufacturing sector in developing countries the bargaining power model of hc mnc host country multinational corporation interaction conceives of economic nationalism in terms of rational self interest and assumes both inherent conflict and convergent objectives in extractive industries there is strong evidence that outcomes are a function of relative bargaining power and that as power shifts to developing hcs over time the bargain obsolesces a cross national study of the bargaining model using data from 563 subsidiaries of u s manufacturing firms in forty nine developing countries indicates that while the bargaining framework is an accurate model of mnc host country relationships manufacturing is not characterized by the inherent structurally based and secular obsolescence that is found in the natural resource industries shifts in bargaining power to hcs may take place when technology is mature and global integration limited in industries characterized by changing technologies and the spread of global integration the bargain will obsolesce very slowly and the relative power of mncs may even increase over time

matching strategy and human resources in multinational corporations strategy is implemented by people this article emphasizes this fundamental notion throughout the characteristics of the major strategic levels and tasks in a multinational corporation mnc are identified along with their implications for strategic human resource management through observations within 4 swedish mncs the process by which human resources have gained a place in strategic management is examined the experience of these firms in matching strategy and human resources is analyzed concluding with suggestions regarding the implications of all this for practitioners and researchers

transnational firms and the changing organisation of innovative activities it is suggested that a transition is taking place towards new modes of organising transnational corporations innovative activities first different units of multinational firms including foreign based subsidiaries are increasingly involved in the generation use and transmission of knowledge secondly multinationals are developing external networks of relationships with local counterparts through which foreign affiliates gain access to external knowledge sources and application abilities as a result of this evolutionary process multinationals organisation is subject to both centripetal and centrifugal forces considerable efforts are then necessary to innovate coordination procedures and mechanisms in order to enhance the generation circulation and use of knowledge a number of empirical works are reviewed providing some evidence of the evolutionary process discussed in the paper 1 transnational companies as networks of innovators economists have long viewed innovation as being primarily generated by firms in their home countries classic contributions in the economics of multinational corporations have consolidated this view referring mainly to the us based multinationals vernon 1966 kindleberger 1969 and stopford and wells 1972 theorised a quasi colonial relationship between the parent company and foreign subsidiaries wherein the latter are in charge of replicating the former s activities abroad with strategic decisions including r d and innovation strategies being rigidly centralised particularly vernon emphasised that coordinating international innovative activities would be too costly owing to the difficulties of collecting and controlling relevant information across national borders host countries and foreign subsidiaries would then play a role almost exclusively in the adoption and diffusion of centrally created technology this view was supported mainly by us economists and based on us evidence from the early post world war ii period but it was very influential for the development of studies on the economics of transnational companies tncs and the internationalisation of

do suppliers applaud corporate social performance the influence of corporate social performance csp on stakeholders is one of the focal issues in corporate social responsibility csr research using data of listed companies in china this paper examines whether csr behavior in the form of charitable donations garners a positive reaction from suppliers results derived from both level and change model regressions show that superior csp makes it easier for a firm to obtain trade credit from suppliers although the effect is significant only in non state owned enterprises non soes the results are robust to various measures of csp and endogeneity tests the results support the strategic philanthropy view and apply stakeholder theory in supply chain that strategic csr can help firms to attract suppliers and consolidate cooperative relationships with them which in turn benefits the firms in terms of more trade credit financing from suppliers this paper also shows that state owned enterprises and non soes have different csr intentions and use csr to achieve strategic goals in different ways the conclusions drawn from this study provide practical guidance on csr strategy suggesting that csr activities can help a firm in transition economies to enhance its corporate image establish and consolidate the good relationship with suppliers and obtain economic benefits or achieve long term business objectives

ownership patterns of u s joint ventures abroad and the liberalization of foreign government regulations in the 1980s evidence from the benchmark surveys data from the benchmark surveys of the commerce department show the beginning of a global liberalization in government restrictions on foreign equity in the 1980s this was manifested in a small but unmistakable across the board reduction in the share of 50 50 and minority affiliates out of all u s affiliates in a country across countries there remains a huge variation in this proportion and the second part of the paper seeks to statistically explain this variation in a cross sectional regression analysis

bargaining power of multinationals and host governments one of the outcomes of negotiation between multinationals and host governments in developing countries the extent of foreign ownership of subsidiaries is influenced by the bargaining power of the two parties foreign ownership measured in various ways appears to be affected by the level of technology of the multinational the degree to which a multinational attempts to differentiate its products the extent to which a subsidiary s output is exported to other parts of the multinational the diversity of products offered by the multinational and the extent of competition by other multinationals the relationship between some of these variables and ownership is not a simple one one variable that others have mentioned as probably affecting bargaining power size of the investment in question appears not to play a significant role in government policies toward ownership but many large projects tend to be located in countries that have lenient ownership policies

government intervention in the venezuelan petroleum industry an empirical investigation of political risk two important aspects of political risk analysis that have not received much attention in the literature are a the reasons why multinational firms experience different types of intervention and b the timing of intervention in order to address these issues this research develops a conceptual model of political risk based on the premise that host government intervention is related to specific objectives of the government vis a vis multinational firms information reflecting the attainment of objectives motivates the government to intervene in a given manner the application of this model to the case of the venezuelan petroleum industry from years 1947 to 1976 provides some support for this model and gives insight into the timing of specific types of intervention

government intervention in less developed countries the experience of multinational companies it is a fact of international business that governments intervene in the operations of foreign direct investors these government actions create a high level of uncertainty in international planning and are very costly to the foreign investor it appears however that not all firms experience the same degree of intervention within almost all nations the government appears to intervene in some foreign companies more than in others at one extreme some firms are forced out of the nation while at the other extreme firms tend to grow and prosper the purpose of this paper is first to explain these different experiences of foreign firms and then to address the question how can foreign firms reduce the amount of intervention they experience the conclusions are based on the intervention histories of more than 100 firms

a coupled markov chain approach to credit risk modeling we propose a markov chain model for credit rating changes we do not use any distributional assumptions on the asset values of the rated companies but directly model the rating transitions process the parameters of the model are estimated by a maximum likelihood approach using historical rating transitions and heuristic global optimization techniques we benchmark the model against a glmm model in the context of bond portfolio risk management the proposed model yields stronger dependencies and higher risks than the glmm model as a result the risk optimal portfolios are more conservative than the decisions resulting from the benchmark model

multinational corporations control systems and delegation issues the paper has 2 major objectives first to identify control and delegation issues confronting multinational corporation managers second to develop a conceptual model to assist multinational corporation managers in selecting appropriate control systems and determining the extent of delegation to be provided to subsidiary managers finally the paper suggests directions for future research

are new tigers supplanting old mammoths in china s banking system evidence from a sample of city commercial banks abstract new tigers including city commercial banks outperform state owned commercial banks burdened with non performing loans from unprofitable state owned enterprises we study whether this is solely due to superior corporate governance multiple shareholders versus total government ownership or also to the favorable environment the new tigers target affluent china while state owned commercial banks operate nationwide using a field survey on 20 city commercial banks from three provinces at different levels of economic development we find better performance at those in the east and worse performance at those controlled by state owned enterprises geography and policy do matter and reform of state owned commercial banks is necessary to bring better banking to china

patterns of strategic control within multinational corporations the management of multinational operations is often required to balance conflicting priorities between responsiveness at the national subsidiary level and central coordination for global competitiveness such balancing requires that relevant data be brought to bear on decisions that consensus be created among key managers and that relative power among them be carefully balanced in large complex mncs the balancing process can be institutionalized through the structuring of relationships between headquarters and subsidiaries

credit channel trade credit channel and inventory investment evidence from a panel of uk firms abstract in this paper we use a panel of 609 uk firms over the period 1980 2000 to test for the existence of a trade credit channel of transmission of monetary policy and for whether this channel plays an offsetting effect on the traditional credit channel we estimate error correction inventory investment equations augmented with the coverage ratio and the trade credit to assets ratio differentiating the effects of the latter variables across firms more or less likely to face financing constraints and firms making a high or low use of trade credit our results suggest that both the credit and the trade credit channels operate in the uk and that the latter channel tends to weaken the former

firm ownership preferences and host government restrictions an integrated approach two approaches may explain how multinational enterprises mnes select ownership structures for subsidiaries the first argues that mnes prefer structures that minimize that transaction costs of doing business abroad the second argues that ownership structures are determined by negotiations with host governments whose outcomes depend on the bargaining power of the firm this paper presents a framework integrating these two approaches and uses statistical methods to separate their effects empirically

international transfers of managers in north american and european mnes global scale mnes require a network of managers to direct and control operations around the world managerial resources for these jobs can be managers from the headquarters country host and third countries international transfers can be for specific staffing needs for management development and for organization development the general hypothesis examined in this paper was the global scale mnes would operate in a regio or geocentric fashion with full integration of the world pool of managerial resources for all international transfers case studies were done on two north american and two european mnes in the chemicals and electronics industries world wide transfers and consequent career opportunities were found in all cases for managers from headquarters countries regional transfers and careers were possible for host and third country managers in regio centric mnes but only national careers were possible in a poly centric mne temporary transfers to world or regional headquarters for management development were found for host and third country managers but transfers for organization development were for headquarters nationals no consistent differences in uses of transfers or international careers were found between north american and european mnes

what makes and what does not make a real option a study of equity shares in international joint ventures this paper examines the boundaries of real options logic with an application to joint ventures jvs we distinguish between forms of uncertainty that are resolved endogenously and those that are resolved exogenously and theorize that only exogenous uncertainty will have the impact predicted by real options theory on a foreign investor s choice of how large an equity share to take in a jv we theorize that macroeconomic and institutional variables generate exogenous uncertainty whereas by contrast cultural distance and choices pertaining to corporate scope and product or process development activities involve endogenous sources of uncertainty that investors can both assess and act upon without having to wait and see using a sample of 6472 sino foreign jvs we find support for our predictions we discuss and implement proper methods to test for the existence of null effects as is relevant to establish the boundaries of a theory such as real options theory we draw implications for research and practice on jvs specifically equity share decisions which deserve more attention and real options including suitable uses and desirable extensions of the concept

influences on foreign equity ownership level in joint ventures in china this study examines the determinants of foreign equity ownership in joint ventures in china drawing upon duning s ownership locational and internalization paradigm and the literature on bargaining power eleven variables that impact foreign ownership preferences and concessions are examined these variables are advertising intensity foreign capital input country risk of china ejv investment amount ejv contractual duration cultural distance competitive intensity local partner state ownership local partner alignment foreign partner alignment and ejv location the empirical findings are largely consistent with the hypotheses the empirical findings are largely consistent with the hypotheses further interesting differences were found among u s european and japanese firms with respect to the impact of these determinants

optimal financing mode selection for a capital constrained retailer under an implicit bankruptcy cost abstract in the context of the capital constrained newsvendor problem under an implicit bankruptcy cost we explore how such a cost affects a capital constrained retailer s financing mode selection decision between bank credit financing bcf and trade credit financing tcf we first study the problem in a single credit channel where the retailer can choose only one of the two financing modes we find that the retailer prefers tcf to bcf only when the tcf interest rate tcf ir is lower than a threshold and the dominant area of tcf expands with increasing bankruptcy cost we then study the problem in a dual credit channel where the retailer can choose a portfolio comprising bcf and tcf and examine two repayment sequences i e repaying bcf first and vice versa we propose two approaches to solve the problems we find that if bcf is repaid first as the tcf ir increases from zero the retailer first chooses only tcf then a portfolio comprising bcf and tcf and finally only bcf on the other hand if tcf is repaid first the retailer always chooses the single credit channel bcf or tcf if the tcf ir is not greater than a threshold or the bankruptcy cost is higher than a threshold otherwise a portfolio comprising bcf and tcf or only bcf finally we conduct numerical experiments to verify our main theoretical findings and examine the effects of the retailer s internal capital endowment on its financing mode selection decision showing that a wealthier retailer is more likely to prefer bcf to tcf

the state as strategist in international business research no matter what strategy managers choose cross national differences in states strategic capabilities and objectives affect multinational corporations capabilities to manage interdependent operations in this paper we develop four attribute dimensions along which states strategic economic capabilities vary we then apply these dimensions to show how they contribute to familiar international business models of managerial process mnc strategy and organizational structure and country competitiveness

structural stability and reconfiguration of international joint ventures previous research suggests that international joint ventures ijvs are inherently unstable and fragile this view has failed however to explain why many ijvs have an extended longevity and stability this paper draws on two contrasting perspectives from organization theory structural instability and structural inertia to trace both the destabilizing and stabilizing forces in ijvs and argues that a complete understanding of an ijv s dynamic evolution requires consideration of both forces

the obsolescing bargaining model mnc host developing country relations revisited the traditional bargaining model of mnc host developing country relations has become obsolete today those relations are better understood as the result of a two tier multi party bargaining process tier 1 bargaining between the governments of host and home countries occurs bilaterally or through multilateral institutions it produces macro rules on fdi that affect micro negotiations in tier 2 per the traditional bargaining model the extent of fdi liberalization resulting from tier 1 bargaining varies predictably across home host country pairs and industries suggestions for testing the two tier bargaining model are also presented

enhancing the obsolescing bargain theory a longitudinal study of foreign ownership of u s and european multinationals this research attempts to enhance the obsolescing bargain theory for manufacturing companies by statistically testing the effects of nine explanatory variables on the static and dynamic manifestations of bargaining success with longitudinal firm level data in order to highlight those effects it develops a conceptual framework that provides a broader context in which the primary variables operate it demonstrates that the obsolescing bargain took effect in india over a fifteen year period following restrictive legislation unlike previous research this study measures the effect of benefits received by multinationals from the host government in exchange for equity dilution american companies are found to retain a smaller share of their foreign ownership over time than british and other european multinationals some explanatory variables that have previously been found to influence level of foreign ownership static bargaining success are found to be less important or have a different effect in explaining proportion of foreign ownership retained dynamic bargaining success

introduction to the symposium multinationals the janus face of globalization panning the globe its af liates andstrategic partnerships linking coun tries in complex webs of alliances themultinational enterprise mne is theembodiment of globalization and itsprincipal agent nation states have con tributed towards making the mne thekey agent of globalization through pro moting technological innovation reduc ing tariff and non tariff barriers and lib eralizing their domestic nancial sys tems multinationals have been theprime movers behind globalization tak ing advantage of the increased opennessof domestic economies to integrate theiractivities across national markets and so cieties given their mobility and visibility itis not surprising that mnes have becomea lightning rod for groups concernedabout the various costs of globalization social cultural political and perhapsmost importantly the economic costs although international business ib scholars and policymakers emphasizethe bene ts of globalization and cooper ative relations with mnes the publicand non governmental organizationshave ignored these views and focused onthe dark side of mne state relations with the growing backlash against glob alization and mnes more research onthe janus face of globalization is neededif the pro mne pro globalization viewsof most ib scholars are to prevail in pub lic policy debates this research symposium served as aninvitation to international businessscholars to further explore the janus faceof globalization through organizing thissymposium we have come to appreciatethat when scholars look at problemsidenti ed with globalization s dark side they also often contribute to our under standing of the bright side the potentialfor globalization to bring with it wide spread bene ts for all we submit that asscholars we can learn more when we tryto ferret out the causal relationships be tween globalization the mne the state

developed country mnes investing in developing economies progress and prospect this study reviews research from 1970 through 2016 on developed country multinational enterprises dmnes entering and competing in developing economies to identify the current state of knowledge of this research and push it further we review the literature using bibliometric and qualitative content analyses covering leading journals and books we articulate frontier issues that are understudied yet critical to both theorization and practice of dmnes in developing economies we discuss the findings and conclusions from prior research along five key areas 1 entering developing economies 2 organizing local activities 3 managing alliances and joint ventures 4 competing in dynamic environments and 5 dealing with institutions governments and society we offer prospective insights into future agenda that have important implications for mne strategies and decisions and propose frontier directions that encompass strategic localization reverse transfer and adaptation co evolution with local business ecosystems reorganizing and restructuring and strategic responses to institutional and market complexity

counter cyclical substitution between trade credit and bank credit abstract this paper explores the substitution relationship between trade credit and bank credit and its counter cyclic dynamic pattern through economic cycles we propose a new theoretical model using a mechanism design method which predicts the substitution between the two credits and its counter cyclic behavior subject to the condition of technological efficiency not less than one this model also helps explain the somewhat contradictory evidence in the literature on the relationship between the two credits we present empirical evidence on the substitution effect and its counter cyclic behavior by using a balanced panel data set of 284 listed chinese companies for the period 1998 2006 we further find that the substitution behaves counter cyclically with respect to the coincident macroeconomic indicator namely gdp our empirical analysis also has some new features such as treating endogeneity carefully and incorporating the lag effect of trade credit coherently

credit contagion and aggregate losses abstract credit contagion refers to the propagation of economic distress from one firm to another this article proposes a reduced form model for these contagion phenomena assuming they are due to the local interaction of firms in a business partner network we study aggregate credit losses on large portfolios of financial positions contracted with firms subject to credit contagion in particular we provide an explicit gaussian approximation of the distribution of portfolio losses this enables us to quantify the relation between the volatility of losses and the determinants of credit contagion we find that contagion processes have typically a second order effect on portfolio losses they induce additional fluctuations of losses around their averages whose size depends on the number of business partners of the firms

the management of the international executive compensation and benefits process scant attention has been given to the organizational locations of the various tasks that comprise the management process responsible for the international compensation and benefits program of particular international firms the organizational locations of 3 managerial tasks associated with these compensation and benefits programs are examined in this article development of policies and procedures financing and supervision and control the article examines the management of u s expatriate and third country manager programs based on the reported practices of u s based firms representing a variety of industries management and theoretical implications of the findings are discussed

structuring international cooperative ventures we examine the effect of bargaining power and informational asymmetry on the design of international cooperative ventures in the presence of restrictions on equity participation and investment when the bargaining advantage rests with the multinational equity participation restrictions can increase the profits to domestic firms and encourage sub optimal investment policies overinvestment occurs when the multinational s bargaining advantage is reinforced by an informational advantage while underinvestment occurs when the domestic firm possesses the informational advantage in contrast when the bargaining advantage rests with the domestic firm equity participation restrictions do not affect investment levels

international human resource strategy and its determinants the case of subsidiaries in taiwan this paper explores how the tension between global integration and local responsiveness affects the dimensions and determinants of international human resource ihr strategy to accomplish this jarillo and martinez s 1990 business strategy framework for parents and their subsidiaries was recast in an ihr strategy setting then the relationships between the two dimensions of ihr strategy that emerged global integration and local responsiveness and a set of interorganizational interdependency variables were explored several new and informative associations between the interorganizational interdependency variables subsidiaries dependence on parent s resources local resources and hot institutions and ihr strategy were observed in a sample of one hundred subsidiaries of japanese u s and european mncs operating in taiwan

theoretical foundations of emerging economy business research in probing theoretically into central and eastern europe transactions resources and institutions we outlined the contributions of research in central and eastern europe cee to theoretical debates in business research in this retrospective we reflect upon the evolution of the field over the past decade with the fading impact of cee s distinct shared history we suggest that cee best be analyzed as emerging economies rather than as a distinct geographic entity emerging economy business research is converging on common themes and shared theoretical ideas while identifying critical variations that constrain generalizations among and beyond emerging economies this research thus highlights the need to develop a better understanding of the boundary conditions of scholarly theories of business knowledge over the past decade the institution based view has emerged from distinct intellectual traditions in institutional economics organizational theory and the analysis of business government bargaining research in these converging lines of theorizing places contextual variations at the center of explanations of business phenomena around the world we suggest that the institution based view is evolving toward a paradigm and offer suggestions on how to advance this research agenda further in particular by exploring how firms engage with different sets of potentially conflicting institutions at multiple levels and locations

corporate trade credit and inventories new evidence of a trade off from accounts payable and receivable abstract trade credit is an important source of finance for firms and has been well researched but the focus has been on financial trade offs in this paper we consider the trade offs with inventories and develop a simple model that recognizes the incentives a firm faces to offer and receive trade credit our model identifies the response of accounts payable and accounts receivable to changes in the cost of inventories profitability risk and liquidity and importantly this influence operates through a production channel our results support the model and complement many existing studies focused on explaining the financial terms of trade credit

political behavior social responsibility and perceived corruption a structuration perspective this study unites the three lenses political behavior corporate social responsibility and corruption and evaluates the way in which multinational enterprises mnes manage political and social forces in a foreign emerging market using the theory of structuration as the conceptual foundation we propose that an mne s propensity to cooperate with the host government is positively related to its philanthropic contribution and resource accommodation whereas its propensity to be assertive with the host government is positively associated with its emphasis on ethics and organizational credibility we argue that when perceived corruption in the business segment increases an mne s propensity to cooperate and be assertive with the government decreases its focus on ethics heightens and its philanthropic contribution diminishes as to the three way interactions when perceived corruption in the business segment increases mnes that focus more on ethics have a greater propensity to use arm s length bargaining to deal with the government whereas those focusing less on ethics have a greater propensity to use social connections to deal with the government our analysis of sample mnes in china generally supports these propositions