the impact of carbon emission costs on manufacturers production and location decision abstract this paper investigates how emerging carbon emission costs may affect the joint production and location decisions for a manufacturer across the world s regions specifically we develop a new theoretical model which explicitly links product demand production costs and carbon emission levels to location decisions and investigate the manufacturer s optimal decisions between two distinct regions the results show that the influence of carbon emissions on manufacturers decisions can vary greatly under different circumstances both off shoring and near shoring are possible under rising carbon emission costs manufacturers with high or low demand have different tolerance levels to the rising carbon emission costs when considering an alternative location trade costs can change the pattern of relocation to gain policy insights for those who pursue reducing carbon emissions different product examples are used to calculate the critical carbon price which triggers different location choices the results suggest that if production technology is stable raising carbon cost itself has only limited effects on reducing total carbon emissions especially for high value low emission industries the location shift which is more sensitive to changes in variable carbon emissions may lead to a significant emission reduction when completed additional pricing decision from the manufacturer shows no significant effect on the location decisions however if demand is linked directly to carbon emission footprint of the product then it is more hopeful that a raised carbon price would reduce the carbon emissions significantly through relocation

umbrella branding with imperfect observability and moral hazard abstract in a framework of repeated purchase experience goods with seller s moral hazard and imperfect monitoring umbrella branding may improve the terms of the implicit contract between seller and buyers whereby the seller invests in quality and buyers pay a high price in some cases umbrella branding leads to a softer punishment of product failure which increases the seller s value in other cases umbrella branding leads to a harsher punishment of product failure which allows for a reputational equilibrium that would otherwise be impossible on the negative side under umbrella branding one bad signal may kill two revenue streams not one combining costs and benefits i determine the set of parameter values such that umbrella branding is an optimal strategy

credible spatial preemption it is often argued that incumbent firms may deter entry by preemptive investment in new goods we show that these conclusions are reversed when multiproduct incumbentfirms may exit in response to entry once entrants are in an industry an incumbent will often want to withdraw some goods to prevent competition with the entrant from reducing profits on other goods such a reaction makes entry more attractive to a potential entrant the equilibrium industry structure is less likely to be monopolistic as the goods are better substitutes as exit costs are low and as the competition between producers of the same good is more intense

the demand for gasoline abstract sufficient time must be allowed to elapse to assess fully the response of gasoline demand to price changes hitherto empirical work on the subject has generally not examined the period beyond 1975 moreover the extant time series studies concentrate almost exclusively on the usa this study extends both the observation period and the country coverage a vehicle stock adjustment model is estimated via its reduced form without explicit consideration of the vehicle stock itself however the estimation procedure incorporates the structure by way of constraints on the parameters cross section analysis offers additional evidence concerning the truly long run price elasticity the results suggest that there is no need to resort to elaborate models to explain adequately gasoline demand gasoline demand exhibits a long run price elasticity near unity with time lags exceeding six years while there is tentative evidence that the duration of these lags is not fixed

regional price level variations and real household incomes in the united kingdom 1979 80 1993 johnston r mckinney m and stark t 1996 regional price level variations and real household incomes in the united kingdom 1979 80 1993 reg studies 30 567 578 for the years 1979 80 to 1993 relative regional price indices rrpis are construced under a variety of definitions the base data are an amalgamation of figures from the reward group s cost of living comparisons and the family expenditure surveys the rrpis are then used to adjust regional household weekly incomes and the impact examined on the inequality of income inequality is decomposed into within region and between region components both components are seen to increase over the time period but both the level and increase in the former are substantially larger than the latter a general conclusion is that inequality within regions far exceeds that between regions johnston r mckinney m et stark t 1996 la variation du niveau des prix regional et les revenus menagers reels au royaume uni de 1979 80 a 1993 reg studies 30 567 578

fuel consumption for road transport in the usa abstract this study provides both a historical analysis of fuel demand for road transport and an example of using econometric results for projections fuel consumption by all motor vehicles in the usa has been analysed by splitting total demand into passenger car truck and other demands distance travelled and fuel efficiency equations have been estimated for both the passenger car fleet and trucks an essentially five equation model has been constructed and used to simulate likely fuel demand patterns up to 1990

does corporate strategy matter a revisionist view that corporate strategy does not matter has gained considerable influence in recent years this view largely stems from empirical results of early variance decomposition studies that found negligible corporate effects associated with profitability differences between businesses our analysis of the variance decomposition literature shows this view to be incorrect not only do the studies as a group show that factors at the corporate level of organizations contribute to profitability differences but also evidence suggests that factors specifically associated with corporate strategy contribute to corporate effects corporate strategy in fact does matter copyright 2001 john wiley sons ltd

coordination demands of international strategies a study of fifty subsidiaries of multinational corporations shows a connection between their strategy and their use of different mechanisms of coordination the main finding is that subsidiaries pursuing strategies with a high degree of integration with their corporate parent make a much more extensive use of both formal and subtle coordination mechanisms than other firms in the sample these results are borne out in both static and dynamic tests they confirm previous literature on coordination mechanisms in organizations in general and apply that literature to the field of multinational corporations which are some of today s more important and complex business organizations

analyzing foreign market entry strategies extending the internalization approach a new fully integrated analysis of the foreign market entry decision is presented encompassing the choice between exporting licensing joint venturing and wholly owned foreign investment the choice between acquisition and greenfield investment is examined and so too are options based on subcontracting and franchising the model extends the insights of internalization theory and draws on concepts from the economics of industrial organization a special feature of the model is the distinction between investment in production facilities and investment in distribution facilities an important practical distinction that has been overlooked in much of the international business literature the strength of competition from indigenous rivals is emphasized as a determinant of entry strategy into both production and distribution

sect subsidy and sacrifice an economist s view of ultra orthodox jews israeli ultra orthodox men study full time in yeshiva until age 40 on average why do fathers with families in poverty choose yeshiva over work draft deferments subsidize yeshiva attendance yet attendance typically continues long after exemption fertility rates are high tfr 7 6 and rising a social interaction approach explains these anomalies yeshiva attendance signals commitment to the community which provides mutual insurance to members prohibitions strengthen communities by effectively taxing real wages inducing high fertility historically the incursion of markets into traditional communities produces ultra orthodoxy subsidies induce dramatic reductions in labor supply and unparalleled increases in fertility illustrating extreme responses social groups may have to interventions

a three stage theory of international expansion the link between multinationality and performance in the service sector it is generally assumed that the performance of a firm improves with greater multinationality yet recent empirical studies have shown both a u shaped relationship which suggests an initially negative effect of international expansion on performance before the positive returns of international expansion are realized and an inverted u shaped relationship which suggests that international expansion beyond an optimal level is again detrimental to performance and results in a negative slope this paper proposes a new unified three stage theory of international expansion that incorporates both concepts in a sigmoid hypothesis it then tests this on data from 11 service industries highlighting the difference between knowledge based and capital intensive service sectors

the importance of nongovernmental organizations ngos in global governance and value creation an international business research agenda the emergence of organized civil society and of nongovernmental organizations ngos as organizational manifestations of broader social movements has dramatically altered the global political economic landscape the increasing global reach of ngos challenges established international business ib research and highlights opportunities for broadening and adapting extant paradigms in the field in this article we introduce the concept of ngos and contrast them with their private sector firm and public sector government counterparts within the context of ib we discuss factors giving rise to ngos as important organizational entities that participate in global value creation and governance and identify limits to their efficacy and viability we identify important questions raised by incorporating ngos into our conceptualization of global context and we challenge three basic tenets of ib theory the definition and dynamics of an institutional field the relevance centrality of a firm government i e two sector bargaining model and the pre eminence of the firm as the global organization of interest within the field we conclude by offering suggested research directions that should serve as catalysts for this new and potentially rich area of future ib research

wage differentials across labor markets and workers does cost of living matter wage differentials studies rarely account for interarea differences in cost of living owing both to data limitations and theoretical ambiguity this study develops a price index for 185 metropolitan areas comprising about 70 of the u s labor force current population survey data for 1985 95 and data on sitespecific amenities are used to estimate earnings differentials based on nominal wages wages fully adjusted for measured cost of living and a simple approximation of real wages with partial adjustment for pricelevel differences dispersion in approximate real wages across 185 labor markets and differentials by region and city size are substantially lower than dispersion in nominal or full adjustment wages estimates of racial and ethnic differentials display moderate sensitivity to choice of a wage measure whereas other standard differentials do not both nominal wages and wages fully adjusted for cost of living may provide misleading estimates of real wage differentials absent data on interarea prices and amenities researchers should include detailed controls for region and city size in nominal wage equations jel j31 r23

fuel consumption for road transport in the usa a comment abstract a recent article in this journal econometrically estimated the relationship between us car and truck fuel economy and the price of fuel without considering the effect of legally mandated fuel economy standards for new vehicles there is considerable evidence that the standards have played an important role in recent fuel economy improvements an alternative approach to estimating the fuel price responsiveness of new vehicle fuel economy based on vehicle sales data and capital operating cost trade off analysis of fuel efficient vehicle design and technology suggests short and long run elasticities in the vicinity of 0 25 and 0 5 respectively

new frontiers in international strategy this paper studies a new frontier in the understanding of international strategy is to explore it we propose the analogy of the ecology of firms and places as a way to emphasize that the real problem is the colocation of different places with different types of firms locations are in fact the distinctive content of international business strategy we deal with this problem with four different perspectives first differences across countries must be addressed with integrative frameworks able to represent the multidimensionality of semiglobalization or intermediate states between total localization and total integration second differences in the development of intermediary markets in a particular place influence firm positioning and industry structure in that place but their impact also crosses different places and it is endogenous to the ecology of places and firms in a systemic integrative way that makes simplifications extremely risky in the design of competitive strategy in an international context third places firms and strategies form a complex ecology that can be studied with a framework focused in understanding the geography strategy link that incorporates different levels of analysis new economic actors and a set of primitives finally firms around the ecology of places face the challenge of developing strategies and business models to serve the majority of humanity today excluded from world trade it is a fundamentally different way to think about the ecology of places and firms overall we present an intriguing new frontier with the capacity to impact both research and practice in the field of international strategy based in understanding the interplay among firms and places

moral hazard as an entry barrier in an experience goods industry an entrant who could make positive profits by providing a better deal to buyers than do incumbents may cheat buyers by providing goods of low quality to make even greater profits if buyers foresee this possibility they will be unwilling to buy from an entrant as a result moral hazard in a seller s choice of the quality of an experience good can lead to a barrier to entry in particular since hit and run entry is likely to lead to low quality choice the threat of such entry may not discipline the pricing of incumbents we also show that the temptation to dishonest entry the moral hazard problem is stronger if buyers are already receiving some consumer surplus as a result there is a first entrant advantage because the first entrant faces less temptation to provide inefficiently low quality than do subsequent entrants and with rational buyers this works to his advantage the scale of entry may affect quality incentives and therefore introductory offers may assure buyers of an entrant s quality but this cannot happen under a suitable definition of constant returns

spatial wage disparities sorting matters spatial wage disparities can result from spatial differences in the skill composition of the workforce in non human endowments and in local interactions to distinguish between these explanations we estimate a model of wage determination across local labour markets using a very large panel of french workers we control for worker characteristics worker fixed effects industry fixed effects and the characteristics of the local labour market our findings suggest that individual skills account for a large fraction of existing spatial wage disparities with strong evidence of spatial sorting by skills interaction effects are mostly driven by the local density of employment not controlling for worker heterogeneity leads to very biased estimates of interaction effects endowments only appear to play a small role

the demand for petrol with explicit new car fuel efficiency effects a uk study 1977 86 abstract a full quarterly model for the demand for petrol motor gasoline is presented which deals with problems of seasonality in price and volume it is shown that the annual new car fuel consumption rate can be incorporated in modelling demand for petrol and this allows a better representation of the structure and mean speed of response of demand to price effects by separately specifying a new car fuel parameter the estimated short run price elasticity is 0 18 after three months rising to 0 2 after a year without such specification the elasticity reduces to 0 14 after three months 0 12 after a year the difference is discussed and interpreted as compensation due to the new car effect the new model year car fuel elasticity is defined and found to be about 0 1 in the sense that a 10 decrease in l 100 km 10 increase in efficiency over the previous model year decreases total petrol demand by 1 by endogenizing both petrol price and volume in a simultaneous system it is possible to identify a supply model for petrol volume in terms of the now endogenous petrol price to give a long run supply elasticity of about 0 4

estimating the performance effects of business groups in emerging markets business groups confederations of legally independent firms are ubiquitous in emerging economies yet very little is known about their effects on the performance of affiliated firms we conceive of business groups as responses to market failures and high transaction costs in doing so we develop hypotheses about the effects of group affiliation on firm profitability affiliation could either boost or depress firm profitability and members of a group are likely to earn rates of return similar to other members of the same group using a unique data set compiled largely from local sources we test for these effects in 14 emerging markets argentina brazil chile india indonesia israel mexico peru the philippines south africa south korea taiwan thailand and turkey we find evidence that business groups indeed affect the broad patterns of economic performance in 12 of the markets we examine group affiliation appears to have as profound an effect on profitability as does industry membership yet strategy scholars have a much clearer grasp of industries than of groups moreover membership in a group raises the profitability of the average group member in several of the markets we examine this runs contrary to the wisdom conventional in advanced economies that unrelated diversification depresses profitability overall our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts conclusions drawn in one context may well not apply to another copyright 2001 john wiley sons ltd

is the international business research agenda running out of steam this research note challenges international business researchers to think of their future work in terms of the past achievements of their discipline it identifies three key research areas corresponding to attempts to tackle crucial empirical questions the explanation of foreign direct investment the multinational firm and the globalization of business it ends by considering the future research agenda

semiglobalization and international business strategy if markets were either completely isolated by or integrated across borders there would be little room for international business strategy to have content distinctive from mainstream strategy but a review of the economic evidence about the international integration of markets indicates that we fall in between these extremes into a state of incomplete cross border integration that i refer to as semiglobalization more specifically most measures of market integration have scaled new heights in the last few decades but still fall far short of economic theory s ideal of perfect integration the diagnosis of semiglobalization does more than just supply a relatively stable frame of reference for thinking about the environment of cross border operations it also calls attention to the critical role of location specificity in the prospects of distinctive content for international business strategy relative to mainstream business and corporate strategy in addition it flags factors products subject to location specificity as being salient from the perspective of international business finally it highlights the scope for strategies that strive to capitalize on the large residual barriers to cross border integration as well as those that simply try to cope with them

regional growth and convergence evidence from the united states tsionas e g 2000 regional growth and convergence evidence from the united states reg studies 34 231 238 the paper considers regional convergence in the us both g and convergence tests indicate that in the period 1977 96 regional incomes do not converge yet kernel density estimates of the distribution show some variation in the tail characteristics of the distribution using finite normal mixtures to examine time invariance of the distribution in a more formal way the paper concludes that the distribution of the logarithms of regional income has indeed shown very little time variation the distribution of income percentages shows some mobility there is a structural break in mixing probabilities mixing means and variances but the mobility is not strong enough to imply a radical change in the co movement patterns of regional means tsionas e g 2000 la croissance et la convergence regionales des preuves provenant des etats unis reg studies 34 231 238 cet article cherche a etudie

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

regional heterogeneity conditional convergence and regional inequality beenstock m and felsenstein d regional heterogeneity conditional convergence and regional inequality regional studies the paper stresses the importance of accounting for regional heterogeneity in the dynamic analysis of regional economic disparities studies of regional growth mainly presume that regions are homogeneous in their socio demographic composition it is argued that the analysis of regional convergence needs to be tested conditionally i e conditional upon the socio demographic structure of the workers in the various regions to this end various measures of conditional regional earnings inequality are estimated using israeli regional data for the period 1991 2002 the results show that about half of regional earnings inequality may be accounted for by the conditioning variables conditioning also makes a large difference to estimates of gini and beta convergence conditional beta and gini mobility are about half their unconditional counterparts beenstock m et felsenstein d l heterogen

business groups and social welfare in emerging markets existing evidence and unanswered questions abstract this paper reviews existing studies of the role of emerging market business groups a ubiquitous but poorly understood organizational form i first suggest that understanding the definition of business groups is itself an interesting albeit under studied research issue i then argue that the existing evidence suggests that the performance effects of group affiliation are large and generally positive there is substantial evidence that part of this is due to welfare enhancing functions originating in the idea that groups substitute for missing outside institutions but that part is also due to welfare reducing minority shareholder exploitation evidence is lacking on the extent to which groups facilitate rent seeking or the exercise of market power evidence is also lacking on the extent to which groups hamper the future development of markets the paper identifies areas where research is needed before current competition policy experiments in countries like china india and korea can be evaluated

international business responses to institutional voids for nearly two decades scholars in international business and management have explored the implications of institutional voids for firm strategy and structure although institutional voids offer both opportunities and challenges they have largely been associated with firms efforts to avoid or mitigate institutional deficiencies and reduce the transaction costs associated with operating in settings subject to those institutional shortcomings the goal of this special issue is to advance scholarship on this topic by a exploring institutional voids that are new to the literature b providing a deeper assessment of the different ways in which firms respond to these voids and c utilizing diverse disciplines and theoretical approaches to do so in this introduction we first review and synthesize extant research on institutional voids tracking the evolution of institutional void scholarship since the inception of the concept khanna palepu journal of economic literature 45 2 331 372 1997 and providing our perspective on its contributions and limitations we then summarize the contributions of the articles included in this special issue in addition to identifying an array of institutional voids economic and social the articles highlight four different strategies for responding to them internalization substitution borrowing and signaling drawing on these we develop new insights on the implications of institutional voids for firm behavior we conclude with suggestions for future research

plastic cars in china the significance of production location over markets for technology competitiveness in the united states versus the people s republic of china abstract this paper demonstrates the significance of location specific differences in manufacturing characteristics and in consumer demand for technology competitiveness it looks in particular at the economic viability of emerging polymer composite automobile body technologies if produced in the united states u s versus if produced in the people s republic of china p r c the results show that polymer composite bodies when produced locally for the local market are competitive for significantly fewer cars in the p r c 7 than in the u s 29 despite consumer demand characteristics in the p r c being more favorable for composites differences in production characteristics between the two locations dominate the overall effect these results suggest that in cases such as automobile bodies where markets and manufacturing location are tightly coupled firms may need to put as much emphasis on understanding the impact of local production differences on technology competitiveness as in understanding local markets

credible spatial preemption through reputation extension abstract judd 1985 rand journal of economics 16 153 166 shows that the results of previous models of brand proliferation and spatial preemption are substantially weakened if the incumbent does not have high exit costs this paper illustrates how an incumbent firm can make spatial preemption credible by extending reputation this is the case with product extensions which are new products but are linked to the successful reputation of another product already on the market it is proved that a product extension can make spatial entry preemption credible because its withdrawal in response to a competitor s new brand can have a negative reputational effect on the incumbent s original product

are causal relationships sensitive to causality tests 1987 are causal relationships sensitive to causality tests applied economics vol 19 no 4 pp 459 465

the evolution of research on coordination mechanisms in multinational corporations the mechanisms of coordination used by multinational corporations mncs are studied through an exhaustive literature review a pattern of evolution is found as time has passed researchers have concentrated more on subtler and informal mechanisms abandoning their unidimensional focus on structural issues it is suggested that the increase in the study of those mechanisms may be due among other reasons to the fact that mncs are indeed making more use of them that could be explained by changes in the international competitive environment which force firms to adjust their strategies requiring ever more multidimensional coordination

umbrella branding as a signal of new product quality an example of signalling by posting a bond i present a signalling model in which a multiproduct firm can use its reputation as a bond for quality by using a brand name for an established product when it introduces a new experience good as out of equilibrium beliefs are specified a false signal may be taken to imply that both the established and the new product are of low quality in contrast the absence of a signal leaves open the possibility that one of the two products is of high quality hence the signal can be credible without excessive sunk costs as long as the bond posted is sufficiently large

international strategy and environment an assessment of the performance relationship this study develops a classification of international business level strategies built on the dimensions of segment differentiation and geographic scope in addition performance outcomes associated with specific international environment and business level strategy matches are suggested using information from firms competing in both global and multidomestic industries the study finds that geographic scope and segment differentiation can be used to distinguish four international strategies the effectiveness of which is a function of the environments in which firms compete

fuel demand on uk roads and dieselisation of fuel economy abstract because of high oil prices and climate change policy governments are now seeking ways to improve new car fuel economy thus contributing to air quality and energy security one strategy is to increase dieselisation rates of the vehicle fleet recent trends in fuel economy show improvement since 1995 however efforts need to go further if the eu voluntary agreement targets on co 2 a greenhouse gas emission standard are to be achieved trends show diesel car sales have accelerated rapidly and that the advantage of new car fuel economy of diesel cars over gasoline ones is narrowing posing a new challenge we estimate the demand for new car fuel economy in the uk in the long run consumers buy fuel economy but not in the short run we found that long term income and price changes were the main drivers to achieve improvements particularly for diesel cars and that there is no break in the trend of fuel economy induced by the agreement adopted in the 1990s policy should target more closely both consumer choice of and use of diesel cars

do markets differ much this essay reports the results of a crosssection study of differences in accounting profitability that sheds light on some basic controversies in industrial economics most previous cross section studies in this field have been concerned with testing hypotheses about structural coefficients in models meant to apply to essentially all markets as we have learned more about the difficulties of constructing such general models and of performing tests on their structural parameters properly structural cross section analysis has fallen out of fashion in contrast to most of the cross section literature the analysis reported here is fundamentally descriptive it does not attempt directly to estimate or to test hypotheses about structural parameters i hope to show by example that one can perform illuminating analysis of cross section data without a host of controversial maintained hypotheses cross section data can yield interesting stylized facts to guide both general theorizing and empirical analysis of specific industries even if they cannot easily support full blown structural estimation one can view the sort of search for stylized facts conducted here as either a replacement for or an input to interindustry structural estimation depending on one s feeling about the long run potential of that research approach this study also departs from much of the cross section literature by being fundamentally concerned with the importance of various effects not just with coefficient signs and t statistics in particular this essay provides estimates of the relative importance of firm market and market share differences in the determination of business unit divisional profitability in u s manufacturing using 1975 data from the line of business program of the u s federal trade commission ftc i find support neither for the existence of firm effects nor for the importance of market share effects moreover while industry effects apparently exist and are important they appear to be negatively correlated with seller concentration in these data section i relates firm market and share effects to current issues and controversies in industrial economics and thus supplies the motivation for our empirical analysis the remainder of the essay treats the data and

an economic model of international joint venture strategy the strategic choice between joint ventures licensing agreements and mergers is analysed using eight key factors suggested by internalisation theory the model explains the increasing role of international joint ventures in the 1980s in terms of the accelerating pace of technological innovation and the globalisation of markets it offers a range of predictions about the formation of joint ventures within industries across industries across locations and over time it exploits a powerful modelling technique that has many other applications in international business strategy

divisionalization and entry deterrence this paper assumes that incumbent firms can create new independent divisions more cheaply than potential entrants who must incur the additional overhead costs of new entry the main theoretical result is that such divisionalization ability leads perfectly informed incumbents to preempt all rational entry into their industries in contrast existing models of entry deterrence imply that informed incumbents even those with steadily decreasing average costs will often allow rational entry our result may explain why successful large scale entry by firms with no informational advantage is extremely rare the use of divisions to preempt entry may also explain why large firms in high profit oligopolies often divisionalize allowing their divisions to compete freely despite the negative pecuniary externality that each division imposes on others

reinventing strategies for emerging markets beyond the transnational model with established markets becoming saturated multinational corporations mncs have turned increasingly to emerging markets ems in the developing world such em strategies have been targeted almost exclusively at the wealthy elite at the top of the economic pyramid recently however a number of mncs have launched new initiatives that explore the untapped market potential at the base of the economic pyramid the largest and fastest growing segment of the world s population reaching the four billion people in these markets poses both tremendous opportunities and unique challenges to mncs as conventional wisdom about mnc global capabilities and subsidiary strategy in ems may not be appropriate how mncs can successfully enter these low income markets has not been effectively addressed in the literatures on global and em strategies an exploratory analysis involving interviews with mnc managers original case studies and archival material indicates that the transnational model of national responsiveness global efficiency and worldwide learning may not be sufficient results suggest that the success of initiatives targeting low income markets is enhanced by recognizing that western style patterns of economic development may not occur in these business environments business strategies that rely on leveraging the strengths of the existing market environment outperform those that focus on overcoming weaknesses these strategies include developing relationships with non traditional partners co inventing custom solutions and building local capacity together these successful strategies suggest the importance of mncs developing a global capability in social embeddedness

centralization in headquarters subsidiary relationships research to date on centralization in mncs has produced many inconsistent findings the present study attempts to add clarity to the situation by re testing many of the existing hypotheses with data from a recent study of centralization in 50 large us uk and european mncs it examines how the degree of centralization inherent in the headquarters foreign subsidiary relationship varies in response to a variety of company wide and subsidiary level conditions the influence of company wide conditions on centralization appears to be much clearer than the influence of subsidiary level conditions the study also identifies several new contingency patterns that appear to be at work in mncs today