Business Commons^™

The Formal Institutional Context Of Informal Entrepreneurship: A Cross-National, Configurational-Based Perspective, Joshua K. Ault, Andrew Spicer

Faculty Publications

While previous comparative research has identified the formal institutional conditions that differentiate countries on their degree of informal entrepreneurship, this paper examines the characteristics that shape cross-national diversity in its type. Based on a series of fuzzy-set qualitative comparative analyses (fs/QCA) of 138 country cases, we find evidence of causal heterogeneity in the configuration of institutional conditions associated with entrepreneurial outcomes that are informal and growth-oriented and those that are informal and subsistence-oriented. Given our results, we propose that the formal institutional-based conditions that differentiate between types of informal sectors are best identified by the conjoint mixture of strength and …

Revisiting Institutional Voids: Advancing The International Business Literature By Leveraging Social Sciences, Marleen Dieleman, Stanislav Markus, Tazeeb Rajwani, George O. White Iii

Faculty Publications

Institutions are vital for solving collective action problems and enabling functioning markets. Based on this notion, the institutional voids literature has offered a dynamic research agenda for international business scholarship. In this perspective article, we leverage work from political science, development economics, legal studies, and anthropology to: (a) expose hidden assumptions about institutional voids in the management literature; (b) propose new directions for research based on our revised assumptions; and (c) provide direction-specific theoretical constructs from other social sciences to stimulate theory-building and empirical inquiry into institutional voids. We develop a framework that identifies four revised assumptions about institutional voids …

Populist Syndrome And Nonmarket Strategy, Daniel J. Blake, Stanislav Markus, Julio Martinez-Suarez

Faculty Publications

Although recognized as a defining feature of the current political era, populism and its implications for non-market strategy remain undertheorized. We offer a framework that (a) conceptualizes populism and its progression over time; (b) outlines the risks populism generates for firms; and (c) theorizes effective nonmarket strategies under populism. Our framework anchors the political risk profile of populism in three interdependent elements: anti-establishment ideology, de-institutionalization, and short-term policy bias. These elements jointly shape the policymaking dy-namics and institutional risks for firms under populism. Our analysis shows how firms can calibrate two nonmarket strategies – political ties and corporate social responsibility …

Long-Term Business Implications Of Russia’S War In Ukraine, Stanislav Markus

Faculty Publications

Following its invasion of Ukraine, Russia’s macroeconomic stability will worsen; foreign trade and Russia-bound investment will dry up; and human capital will become scarce. Russia will not fully compensate these losses with increased economic engagement with China, with particular deficiencies likely in high-tech areas for Russia. Import substitution is also unlikely to allow Russia to innovate its way out of economic isolation or escape the resource curse. As Kremlin-connected elites further dominate the impoverished economy, crony state capitalism and kleptocracy will rise. The global repercussions of Russia’s war will include commodity shocks and the attendant supply chain disruptions and inflationary …

Inclusive Growth In Africa: Are Chinese Investment And Local Industry Participation Compatible?, Emmanuel T. Kodzi

Faculty Publications

Purpose - This study set out to explore whether increasing Chinese FDI is associated with rising contributions of local industry in African countries connected to the Belt and Road Initiative (BRI). The existence of cooperative industry linkages between Chinese investments and local businesses is a necessary condition for achieving the mutual benefits asserted by the BRI.

Design/methodology/approach - Under growing FDI, we framed increasing local industry contribution as indicative of existing industry linkages. Using principal component analysis and multiple regression on collated country-level data, we examined relationships between key industry output variables and several independent variables representing Chinese investment and …

Investors’ Reactions To Csr News In Family Versus Nonfamily Firms: A Study On Signal (In)Credibility, Naciye Sekerci, Jamil Jaballah, Marc Van Essen, Nadine Kammerlander

Faculty Publications

We study family firm status as an important condition in signaling theory; specifically, we propose that the market reacts more positively to positive, and more negatively to negative, CSR news (i.e., signals) from family firms than to similar news from nonfamily firms. Moreover, we propose that during recessions, the direction of these relationships reverses. Based on an event study of 1247 positive and negative changes in the CSR ratings for all firms listed on the French SFB120 stock market index (2003-2013), we find support for our hypotheses. Moreover, a post hoc analysis reveals that the relationships are contingent on whether …

Taking Advantage Of Institutional Weakness? Political Stability And Foreign Subsidiary Survival In Primary Industries, Nathaniel C. Lupton, Donya Behnam, Alfredo Jiménez

Faculty Publications

Purpose

This paper aims to investigate the extent to which locating primary industry subsidiaries in politically unstable countries impacts their survival. The authors argue that foreign multinational enterprises in less stable political environments can shape policies that are impactful on the costs of operating in primary industries and avoid compliance with more stringent policies at home.

Design/methodology/approach

Using a sample of 753 primary sector investments of Japanese multinational enterprises during the period 1986 to 2013, the authors conduct a parametric survival analysis of the relationship between political stability and subsidiary survival.

Findings

Political instability has a slight, curvilinear relationship with …

National Income Inequality And International Business Expansion, Nathaniel C. Lupton, Guoliang Frank Jiang, Luis F. Escobar, Alfredo Jiménez

Faculty Publications

We examine the extent to which host country income inequality influences multinational enterprises’ (MNE) expansion strategy for foreign production investment, depending on their specific strategic objectives. Applying a transaction cost framework, we predict that national income inequality has an inverted U-shaped relationship with foreign production investment. As inequality increases, MNEs accrue lower transaction costs arising from interactions with various local actors, leading to higher probability of investment. As income inequality increases further, its effect on location attractiveness will become negative, as its attraction effect is increasingly offset by additional monitoring, bargaining, and security costs owing to the more fractious nature …

U.S. Fdi And Shareholder Rights Protection In Developed And Developing Economies, Vishaal Baulkaran, Nathaniel C. Lupton

Faculty Publications

We examine the impact of shareholder rights protection on U.S multinational firms’ Foreign Direct Investments (FDI). We hypothesize that the expropriation of wealth is less likely to occur in countries with strong shareholder rights and hence, these countries will attract more FDI relative to countries with weaker shareholder rights protection. We also hypothesize that this relationship will be more important for developing countries compared to developed countries. Based on an analysis of US FDI data over the period 1997-2016, we find support for our predictions. These findings emphasize the importance of institutional development for economic development, via the attraction of …

From Design To Delivery: Teaching Supply Chain Management To Ib Majors, Emmanuel T. Kodzi

Faculty Publications

Curricular development is critical for preparing students in a coordinated fashion for life after graduation – especially when their roles will involve cross-border business decisions. The design of specific courses in any curriculum must be purposeful in terms of what is taught, how it is taught, and how all the course components fit together. For a supply chain management course targeted at international business (IB) students, one key purpose is to understand how competitiveness is developed across the extended enterprise, rather than within the confines of individual companies. This “winning together” view helps foster capabilities for connectedness and cooperation in …

Social Ties, Prior Experience, And Venture Creation By Transnational Entrepreneurs, Sarika Pruthi, Mike Wright

Faculty Publications

The interaction between resources, and host and home country contexts of transnational entrepreneurs (TEs), is important for understanding their strategies and hence performance of their ventures. Yet, how they deploy their unique experiences and social networks in the founding of ventures in multiple institutional contexts is less understood. Based on 15 in-depth interviews with TEs of Indian origin in the UK, and nine of their counterpart heads of transnational venture (TNV) operations, we explore the use of prior experience, and personal and industry ties in the founding of TNVs in their home country. Our findings show that the way TEs …

Live And Let Live: Africa’S Response Options To China’S Bri, Emmanuel T. Kodzi

Faculty Publications

Kodzi offers a timely perspective on the ongoing debate about how China’s BRI might deliver tangible benefits to African partners. The impact of Chinese engagement on local businesses in different regions is explored both broadly, and in a specific African country context. Using the resource dependence theory and the supply chain practice view, the chapter focuses on technology- and knowledge-enhancing industry linkages to conceptualize a pragmatic response by African industry sectors to the competitive pressures associated with Chinese business engagement. By adopting a response view, this chapter proposes credible options for African countries to increase the strategic value of their …

Cooperative Strategies In International Business And Management: Reflections On The Past 50 Years And Future Directions, Paul W. Beamish, Nathaniel C. Lupton

Faculty Publications

Over the past 50 years, cooperative forms of governance such as equity joint ventures and other strategic alliances have received tremendous attention in international business and management research. This article traces the history of this research over these past five decades with particular emphasis on the critical role that (Columbia) Journal of World Business has played in disseminating scholarly and managerial expertise on the successful management of cross-border, inter-firm collaboration. We highlight the evolution of interest in different contexts, phenomena, theories, and methodologies, along with the factors that have driven interest in these topics. Several suggestions for future research are …

Going The Distance: The Pros And Cons Of Expanding Employees’ Global Knowledge Reach, Shad S. Morris

Faculty Publications

While some scholars have suggested MNEs to be superior to markets for managing knowledge across geographically distant boundaries, how they actually accomplish this has not been fully considered. We address this void by developing and testing a model that highlights the critical role of organizational incentives in enhancing employees’ internal search and use of knowledge. Data from 166 knowledge-intensive projects support our argument that, in contrast to process-based incentives that influence more local search, outcome-based incentives motivate employee teams to reach well beyond their immediate location, which in turn enhances performance. At the same time, we demonstrate that expanded reach …

Innovation Outcomes Of Knowledge-Seeking Chinese Foreign Direct Investment, Xianming Wu, Nathaniel C. Lupton, Yuping Du

Faculty Publications

Purpose

The purpose of this paper is to investigates how organizational learning, absorptive capacity, cultural integration, specialization of the acquired firm and characteristics of transferred knowledge impact innovation performance subsequent to overseas acquisitions.

Design/methodology/approach

Survey responses from 222 Chinese multinational enterprises engaged in overseas acquisitions.

Findings

Differences between acquiring and acquired firms’ capabilities, while having a positive direct influence, suppress the positive impact of organizational learning and absorptive capacity, suggesting that multinationals require some basic level of capabilities to appropriate value from overseas acquisitions.

Research limitations/implications

This paper investigates the impact of knowledge-seeking overseas acquisition of Chinese multinationals on innovation …

The Clash Of Missions: Juxtaposing Competing Pressures In South Africa's Social Enterprises, Emmanuel T. Kodzi

Faculty Publications

Social enterprises seek critical resources to fulfill their mission in a defined domain of action. However, this quest also constitutes a distraction that complicates the operations of any social enterprise. By analyzing the logic of control versus the logic of empowerment for operating scenarios in South Africa, we examine the process trade-offs that enhance or limit social impact. Our findings prioritize efficiency in resolving process trade-offs, since the focus on value creation diminishes the replenishment cycle for value capture. We propose that value chain processes be controlled to the extent that the enterprise acts as a custodian of community empowerment …

International Expansion Through Flexible Replication: Rethinking The Propositions, Emmanuel T. Kodzi

Faculty Publications

The international expansion of businesses today invites the analysis of organizational mechanisms that allow these businesses to thrive in spite of the known challenges of doing business in a foreign culture or market. Specifically, the extent to which firms replicate their existing business models relative to the perceived need for local adaptation is topical. This paper is a commentary on the brilliant work of Anna Jonsson and Nicolai Foss, who outline a model of flexible replication, drawing from a longitudinal study of IKEA, the famous Swedish home furnishing company. Their study concludes with four propositions for further investigation. For the …

Organizational Structure And Knowledge-Practice Diffusion In The Mnc, Nathaniel C. Lupton, Paul Beamish

Faculty Publications

Purpose

This study aims to examine the interaction of formal and informal cross-border knowledge-sharing practices of four large multinational corporations (MNCs) in aerospace, software, IT services and telecommunications industries. The goal was to determine the manner in which coordination and control mechanisms facilitated knowledge transfer.

Design/methodology/approach

Case studies comprised secondary data and semi-structured interviews with corporate headquarters and subsidiary managers in large MNCs conducted in the USA, Canada, Mexico, China, India and Eastern Europe.

Findings

The primary finding of this study is that knowledge transfer mechanisms arise as a result of both formal and informal structures of the MNC. Formal …

Impacts Of China’S Foreign Direct Investment In Sub-Saharan Africa, Jian Zhang, Ilan Alon, Yanan Chen

Faculty Publications

This paper examines the impacts of foreign direct investment, as well as China’s FDI on GDP growth of Sub-Saharan African countries from a macroeconomic perspective. By using the data from 44 Sub-Saharan African countries from 2003-2010, our GMM results show that neither China’s FDI nor FDI net inflow in SSA has significant effect on economic growth of SSA countries. The possible explanations about the insignificant results include crowding out effect of China’s FDI on domestic investment, the declining in outward FDI in traditional sectors and rising in service sector which ignored in the current model, and the types of sectors …

Teaching International Business Via Social Media Projects, Ilan Alon, Ruwanthi Herath

Faculty Publications

The purpose of this study is to evaluate the outcomes of an experiential learning technique coupled with social media in an international marketing course. It was conducted among 155 students placed in groups that were assigned to develop a YouTube video for use as a country branding marketing tool. Measured evaluations of the students’ perceptions of the experience reveal that it was both beneficial and positive, and it helped to promote an understanding of the importance of team work and the uses of technology. Factor analysis grouped the perceptions and attitudes regarding the exercise into four categories.The differences in perception …

Entrepreneurship In Emerging Markets: New Insights And Directions For Future Research, Ilan Alon, Daniel Rottig

Faculty Publications

In recent years, the entrepreneurship and emerging markets research streams have intersected. Emerging markets provide an opportunity to examine entrepreneurship in different contexts and forms. This article discusses the current literature that interconnects both research streams in general, comments on the contributions of the articles published in the special issue on entrepreneurship and emerging markets in particular, and sketches out future avenues for research. These contributions span several theoretical lenses, including institutional theory, internationalization theory, transaction cost economics, and the resource-based view, as well as multiple geographic regions, including China as the largest emerging economy and other countries in East …

The Internationalization Of Chinese Entrepreneurial Firms, Ilan Alon, Orly Yeheskel, Miri Lerner, Wenxian Zhang

Faculty Publications

This article uses the resource-based and internationalization theories to explain the export behavior of Chinese entrepreneurial firms. Based on multi-year data on Chinese firms from the Global Entrepreneurship Monitor (GEM), we show that contextualized resource-based theory can adequately explain some of the variation in export behavior among young Chinese firms. Exports by small Chinese firms are driven by the social and intellectual capital of the entrepreneur and their entrepreneurial proclivity, and the innovativeness/uniqueness of the product/offering.

The Moderating Effects Of Environmental Dynamism On The Relationship Between Dynamic Capabilities Strategy And New Venture Performance In An Emerging Market, Ilan Alon, Hao Jiao, Koo Chun Kwong, Yu Cui

Faculty Publications

Building from resource-based view, this study developed a model of the dynamic capabilities strategy in an emerging market, especially with a particular focus on the new ventures. We generated hypotheses based on this framework, linking them with new venture performance, with the moderation role of environmental dynamism. We tested our hypotheses on a sample of new ventures in the context of China's Yangtze River Delta Region. Empirical results showed that environmental sensing capability and changing and renewal capability had significant impacts on new venture performance. Additionally, environmental sensing capability, and changing and renewal capability both had a stronger impact on …

Chinese Overseas M&A: Overcoming Cultural And Organizational Divides, Francesca Spigarelli, Attilio Mucelli, Ilan Alon

Faculty Publications

This article contributes to the existing knowledge on the difficulties and critical aspects of the post-acquisition phase of an emerging market multinational. To establish the context, a literature review on multinational companies from emerging countries, and specifically on the internationalization initiatives of Chinese companies, is provided, along with a framework to analyze cultural and management-related differences related to mergers and acquisitions (M&As). This review and framework is followed by a case study of a Chinese motorbike M&A in Italy. The case illustrates how Chinese companies use Italy to access Western markets (and strategic logistical services), as well as a wide …

Is China’S Outward Investment In Oil A Global Security Concern?, Ilan Alon, Aleh Cherp

Faculty Publications

The dramatic increase in investment by Chinese SOEs in overseas oil assets is primarily driven by energy security concerns. Whether such investment will benefit or harm energy security of other countries is hotly contested. On one hand, this investment can supplement the overall lack of investment in the sector, benefiting all consumers. On the other hand, it may exacerbate environmental and political problems associated with fossil fuels.

The Globalisation Of Chinese Capital, Ilan Alon

Faculty Publications

The globalisation of Chinese capital will be one of the hallmarks of 21st-century economics, shaping debates over state capitalism, ‘free’ markets and international institutions. China internationalised its product markets and upgraded its manufacturing prowess towards the end of the 20th century by allowing inward foreign direct investment (FDI) and by promoting export trade. This was supported in part by cheap labour, and resulted in growing trade surpluses with key trading partners—particularly the US. Outward FDI was discouraged in order to preserve foreign reserves, and together these policies have helped China accumulate significant amounts of capital, now making it a multi-trillion …

The Impact Of Corruption On Firm Tax Compliance In Transition Economies: Whom Do You Trust?, Anna Alon, Amy M. Hageman

Faculty Publications

Tax compliance is an important issue for governments and the public alike. To meet public needs and fund public mandates, firms around the world are expected to comply with tax laws. Factors that are related to organizational (firm) tax compliance have not been sufficiently examined in the literature. Due to the increasing global influence of transition economies, factors associated with firm tax compliance in transition economies are particularly of interest. Based on a sample of over 5,000 firms from 22 former Soviet Bloc transition economies, we find that higher levels of corruption and higher levels of particularized trust (reliance on …

Regional Differences In Preferences For Managerial Leader Behavior In China, Romie F. Littrell, Ilan Alon, Ka Wai Chan

Faculty Publications

This study demonstrates the complexities of analyzing determinants of cultural differences between and within national cultures. Ralston, Yu, Wang, Terpstra, and He (1996) investigated geographic regional differences in values in China, finding significant differences among the regions. This study investigates geographic regional differences in preferred managerial leader behavior in four provinces. In 2002, 2003, 2004, and 2005 the Leadership Behavior Description Questionnaire XII (LBDQ XII) was administered to people working in business organization in Zhengzhou City, Henan Province; Suzhou City, Jiangsu Province; Guangzhou City, Guangdong Province; and in the Macau Special Administrative Region, in the Peoples’ Republic of China. Significant …

Macroeconomic Prospects For China’S Outward Fdi, Ilan Alon, Tanya Molodtsova, Jian Zhang

Faculty Publications

This article presents evidence from panel data on overseas foreign direct investment (OFDI) by Chinese firms in 103 countries during 2003-2007. The data suggest that Chinese imports, unlike Chinese exports, stimulate investment in the country of origin. This article supports the theory that Chinese investment abroad is horizontal and designed to serve the Chinese local market (import platform investment). Estimates suggest that a 1% change in imports from China will lead to a 0.15% change in Chinese OFDI. We also find that an appreciation of the Chinese exchange rate will have a strong influence on firm entry decisions.

Social Burden, Social Venture Or Social Responsibility? A Reflection On Csr In China And Csr Strategy Suggestions For Multinational Companies In China, Mantian Wang, Rongming Ren, Guiyi Hu, Hongyong Lu, Ilan Alon

Faculty Publications

Thirty years into its reform and opening, the People’s Republic of China (referred to as China) has become aware of many international practices, including corporate social responsibility (CSR). Yet FOR Chinese enterprises, CSR seems similar to the heavy social burdens of THE state-owned enterprises (SOEs). The “cradle-to-grave” welfare system, notorious but standard in THE planned economy, played a role in the failure of most SOEs to compete with the new, burgeoning private sector. Although laws were promulgated to free the SOEs from their “social burdens,” the new township enterprises set a different example. Some of the latter even profited from …