This study examines the role of international institutional complexity, which is defined as the scope and multiplicity of institutional dimensions across foreign markets, on emerging market multinational companies (EMMCs)' innovation performance. We propose that the international institutional complexity provides learning opportunities for EMMCs' innovation performance but also incurs higher management costs to handle information overload from overextended internationalization. We further propose that the host exposure and the heterogeneity of an EMMC's top management team (TMT) moderate the main effect of international institutional complexity on EMMC innovation. The empirical testing utilizes a longitudinal panel data of 7,072 foreign expansion steps by 767 Chinese firms between 2001 and 2010, offering strong support for the proposed hypotheses.
Which emerging markets offerthe best bets for future-minded investors and CEOs? Most research shows that investors and managers that treat emerging markets as groups – and assess them according to relative performance vis-a-vis their peers -- tend to profit more than those taking a country-by-country approach. We show that emerging markets that did well yesterday usually do well tomorrow. But more importantly, our method for grouping emerging markets allows us to draw some profitable insights. For example, advanced emerging markets grow with more investment in internet access; dormant economies grow with more investment in political institutions. Our analysis also reveals a surprising finding - advanced economies possess far more growth potential than dormant economies. First ranked Estonia looks moribund compared to the extra 25% GDP growth the Republic could have achieved by implementing best-in-the-world policies. Even better, most emerging markets could have “given up” (saw reductions without GDP falling) significant internet connections, foreign direct investment or other factors – just by copying best practice.
77th Annual Meeting of the Academy of Management
We develop a model to understand soverign wealth funds’ (SWFs) governance activism based on the structure of political regimes. Drawing on theories of institutions that differentiate among political regimes with regard to the extent of political competition, coupled with emerging research on SWFs, we identify 16 specific political regime-SWF combinations that correspond to whether SWFs engage in passive or aggressive forms of governance activism. Passive activism refers to the SWF selling its stake if it disagrees with a firm’s management decisions; aggressive activism refers to the SWF intervening in an invested firm to change executives, force mergers or divestments, or alter firm strategy in some way. Theoretically, our model advances the institutional logics perspective to explaining firm performance. We also discuss implications for research on SWFs as well as theoretical implications for the business groups, international business, and corporate governance literatures.
Parkland Chair Professor of Strategy at CEIBS Seung Ho Park explains some of his key research findings on ASEAN Champions - strong local firms operating in the ASEAN Economic Community in Southeast Asia, which is set to become the seventh largest economy in the world. Here Professor Park discusses the factors that have enabled these high-performing firms to succeed, and in many cases to beat rival multinational firms. He also shares several examples of these firms in different countries throughout the ASEAN community.
The purpose of this paper is to develop the theoretical linkage between culture and economic growth and empirically test the relationship by measuring culture and how it affects labor productivity.
This study uses a cross-section study of developing countries and regresses economic productivity growth on a set of control variables and cultural factors.
It is found that three cultural factors, economic attitudes, political attitudes, and attitudes towards the family, affect economic productivity growth.
Many economists ignore culture as a factor in economic growth, either because they discount the value of culture or because they have no simple way to quantify culture, resulting in the role of culture being under-researched. The study is the first to extensively examine the role of culture in productivity growth using large-scale data sources. The authors show that culture plays an important role in productivity gains across countries, contributing to the study of the effects of culture on economic development, and that culture can be empirically measured and linked to an activity that directly affects the economic growth – labor productivity.
This book presents a framework for a different type of profitable growth for multinational companies in emerging markets: "scaling the tail." This model focuses on specialized market niches, flanking particular segments and product-categories, developing deeply nuanced localization strategies, and installing supportive management systems.
Why are MNCs finding it harder to turn a profit in emerging markets? Sam Park, CEIBS Professor of Strategy and author of Scaling the Tail explains how multinationals can sustain profitable growth in these markets. ----------------------------------------- Parkland Chair Professor of Strategy at CEIBS Seung Ho Park has co-authored the book Scaling the Tail: Managing Profitable Growth in Emerging Markets which has been published by Palgrave/Macmillan. The book advises that a new approach to emerging markets is needed if multinationals in the consumer goods and retailing sectors want to maintain, and increase, profitability. The findings presented in the book are based on in-depth field interviews, along with a survey of 253 managers in 10 countries, conducted under the auspices of a collaborative Ernst and Young team and the Economist Intelligence Unit. These findings indicate that the emerging market growth strategies that multinationals relied on in the past are no longer viable. Instead, these companies need to extend more recent advances in value-distribution, in which peripheral sales (those in the “tail”) outnumber traditional mass sales (those in the centre of any distribution). Specifically, the authors discuss how focussing on specialized market niches using high-end brands, flanking particular segments and product categories, developing deeply nuanced localization strategies, and installing supportive management systems are now important strategies for consumer goods and retailing companies who want to ensure their long-term growth in emerging markets. Both academic and practioner reviews for the book has been positive: “Creative, bold and contrarian, Scaling the Tail up-ends conventional wisdom about how to succeed in emerging markets and offers a fresh new formula for profitable growth.” Peter Williamson, Hon. Professor of International Management, University of Cambridge “As a leader in the global consumer goods industry, we have first-hand experience with the pressures of sustaining growth in an increasingly competitive global marketplace. Scaling the Tail clearly illustrates the key strategies and actions that multinational firms can take to ensure that they are in the group of high-performers in emerging markets.” Ehab Abou Oaf, Asia Pacific President, Mars Chocolate The book features a forward by CEIBS International Advisory Board Chairman Dr. John A. Quelch. Prof. Park’s co-authors are Gerardo R. Ungson, Y.F. Chang Endowed Chair Professor of International Business at the college of Business, San Francisco State University, and Andrew Cosgrove, Global Lead Analyst for Consumer Products and Retail at Ernst and Young, UK. Prof. Park was President of SKOLKOVO-Ernst & Young Institute for Emerging Market Studies and Chair Professor of Strategy at Moscow School of Management SKOLKOVO. He was the founding president of Samsung Economic Research Institute China and a member of the Academic Council at CEIBS. He has served as Division Chair of the Academy of Management and a board member of most major management journals and is a Fellow of the Academy of International Business.
Journal of International Business Studies
Emerging markets experience institutional and social changes over time that present different stakeholder expectations for multinational corporations (MNCs). MNCs are often accused of social misdeeds and experience public crises during the changes, leaving questions on how they adapt to the local social transition to sustain operations. Conventional adaptation strategies put too much emphasis on maximizing economic returns by arbitraging national differences and catering to local market and consumer characteristics. The economic orientation may fail to address evolving and diverse stakeholder expectations, easily leading to public crises. This study conceptualizes economic adaptation and social adaptation as two sets of knowledge and capabilities that would have equally important impacts on MNCs’ sustainable operations in emerging markets. The empirical testing examines consumer rights-related public crises experienced by 180 MNCs in China. The results suggest that MNCs’ social adaptation activities have significantly positive effects in mitigating public crises while certain aspects of economic adaption, such as early entry into China, reliance on local leadership, and speedy expansion of local employees, lead to public crises. The significant interaction effects confirm that MNCs need to follow a balanced approach, paying attention to both economic and social components to avoid public crises and sustain growth in emerging markets.
event history analysis
multinational corporations (MNCs) and enterprises (MNEs)
Academy of Management Annual Meeting Proceedings
This study examines three types of parent control in IJVs and their relationships with local parent goal achievement. Our findings, based on a survey of 194 IJVs in China, suggest positive impacts of local parent controls and mixed impacts of foreign parent controls.