The John H Dunning Centre for International Business
Discussion paper series
In 2011 the John H Dunning Centre for International Business relaunched its Discussion Paper Series.
The objective of the series is to improve the public availability of research undertaken by researchers affiliated to the Centre. It represents research results that in whole or part are suitable for submission to a refereed journal, to a major conference or to the editor of a book.
For further information, or to submit a paper, please contact firstname.lastname@example.org.
The Impact of Stop-Go Demand Management Policy on Britain's Consumer Durables Industries, 19521965
Series Reference: IBH-2016-02
We examine the impacts of British government ‘stop-go’ policy on domestic sales of consumer durables over 1952 – 1965, via hire purchase restrictions and punitive Purchase Tax rates. Our analysis includes a general review of contemporary evidence regarding the impacts of these measures, a more detailed study of the television sector, and time-series econometric analysis for both televisions and a representative high-ticket labour-saving consumer durable –washing machines. We find that the restrictions had devastating impacts on Britain’s consumer durables industries, preventing firms from fully exploiting economies of scale, reducing output growth and international competitiveness, and eroding industrial relations. Government officials were aware of these problems, but considered them a price worth paying to facilitate moves towards sterling convertibility and the re-establishment of the City as a leading financial and trading centre.
Theorizing the Meaning(s) of Expatriate: Establishing Boundary Conditions
Yvonne McNulty Professor Chris Brewster
Series Reference: JHD-2016-05
This paper examines the concept of expatriates, arguing that sloppy use of the term in the past has led to problems of inconsistent research, incompatible findings and a lack of clarity in the field. The increasing interest over the last dozen years or so in other forms of international
experience, often equally poorly conceptualised, has compounded the problem. We argue for the need for greater construct clarity in studies of expatriates and, by extension, of other forms of international experience. Specifically we attempt to clarify to whom does the term ‘expatriate’, and specifically ‘business expatriate’, apply and the boundary conditions under which expatriate employment is enacted.
expatriates, expatriate definition, boundary conditions for expatriation, business expatriates, migrants, sojourners
Conceptualising the Future of HRM and Technology Research
Tanya Bondarouk Professor Chris Brewster
Series Reference: JHD-2016-06
This paper examines the role of information technology (IT) directly on one central aspect of work in the twenty-first century, its impact on human resource management (HRM) itself. We use the long-established ‘Harvard’ model of HRM, offering a more contextualised view of HRM, a more expansive view of stakeholders, and a wider and more long-term approach to outcomes. Applying those principles to the literature on IT and HRM helps us clarify both the advantages and disadvantages to different stakeholders of the intersection between HRM and technology. We show that rapid technological developments offer a new, smart, digital context for HRM practices with the better quality HRM data and enabling a strong HRM ownership by all stakeholders. At the same time, we see a tension in HRM responsibilities between HRM professionals and organizational members who are not directly assigned HRM tasks but are the subject of them. On the basis of that analysis we offer suggestions for future research.
information technology, human resource management, contextual HRM, multi-stakeholder perspective, e-HRM, HRM outcomes, Harvard approach
Human Resource Management: The Promise, the Performance, the Consequences
Professor Chris Brewster Paul N Gooderham Wolfgang Mayrhofer
Series Reference: JHD-2016-07
Reviewing the trajectory of human resource management research over the last thirty years, this polemical paper argues that the dominant focus has been on 'Strategic HRM' or HRM that is supposed to improve firm performance in some way. It argues that this narrow focus has not
only proved disappointing in its own terms but has led to the subject being addressed in a simplistic neo-liberal way that fails to take into account the wider constituency of HRM stakeholders and does not address many of the 'big issues' that these stakeholders face in practice. It calls for a wider and more realistic research agenda.
HRM strategy, job satisfaction, sustainable HRM, contextual HRM
The introduction of the joint-stock company in English banking and monetary policy
Victoria Barnes Dr Lucy Newton
Series Reference: IBH-2016-01
Following the passage of the 1826 Act, the joint-stock bank entered the English banking system and its dominance over the private bank is often thought to be a result of laissez-faire political ideology. This article shows that banking and monetary policy in the nineteenth century was far from liberal or permissive as regulators legislated with a clear idea of the intended outcomes of their actions. Yet, as policy-makers were often unsuccessful in their attempts to introduce change in the banking system, they became interventionist in an effort to rectify their mistakes. By placing regulation in its political context, we show that the emergence of a set of banks with shareholders, sleeping partners and investors as owners was both unexpected and unintentional. It reveals their subsequent attempt to repeal the 1826 Act and dissolve the offending companies through more legislation.
Banks, nineteenth century, policy-making, legislation
Import, Export and Multinationality. Evidence from Swedish Firms
Professor Davide Castellani Claudio Fassio
Series Reference: JHD-2016-08
This paper studies the role of imported inputs in explaining firms’ export behaviour. Unlike most of the existing literature we are also able to control for the participation of domestic firms to multinational networks. This allows us to test to what extent the recurrent evidence that
importing foster exporting activity is instead a figment of the fact that importers are also part of multinational groups. Our evidence, based on Swedish manufacturing firms, suggests that imported inputs, rather than multinationality, are a key determinant of firms’ export propensity
and product scope. This result is particularly strong for SMEs, and it is driven by imported intermediates and (to a lesser extent) capital goods.
importing, exporting, multinational enterprises, Sweden
Multinationality, R&D and productivity: Evidence from the top R&D investors worldwide
Professor Davide Castellani Sandro Montresor Torben Schubert Antonio Vezzani
Series Reference: JHD-2016-04
This paper investigates the effects of multinationality on firm productivity, and contributes to the literature in two respects. First, we argue that multinationality affects productivity both directly and indirectly, through higher incentives to invest in R&D. Second, we maintain that the multinational depth and breadth have different direct effects on productivity and R&D. Using data from the top R&D investors in the world, we propose an econometric model with an R&D and a productivity equation that both depend on multinationality. We find: i) multinational
depth has a positive effect on productivity, while the effect of multinational breadth is negative; ii) multinationality (along both dimensions) has a positive effect on R&D intensity, translating into an indirect positive effect on productivity; iii) the positive indirect effect is however not large enough to compensate the negative direct effect of multinational breadth.
R&D and Productivity in the US and the EU: Sectoral Specificities and Differences in the Crisis
Professor Davide Castellani Mariacristina Piva Torben Schubert Marco Vivarelli
Series Reference: JHD-2016-03
Using data on the US and EU top R&D spenders from 2004 until 2012, this paper investigates the
sources of the US/EU productivity gap. We find robust evidence that US firms have a higher capacity to translate R&D into productivity gains (especially in the high-tech industries), and this contributes to explaining the higher productivity of US firms. Conversely, EU firms are more likely to achieve productivity gains through capital-embodied technological change at least in medium and low-tech sectors. Our results also show that the US/EU productivity gap has worsened during the crisis period, as the EU companies have been more affected by the economic crisis in their capacity to translate R&D investments into productivity. Based on these findings, we make a case for a learning-based and selective R&D funding, which – instead of purely aiming at stimulating higher R&D expenditures – works on improving the firms’ capabilities to transform R&D into productivity gains.
Multinational Enterprises and Economic Development in Host Countries: What We Know and What We Dont Know
Professor Rajneesh Narula André Pineli
Series Reference: JHD-2016-01
The attraction of multinational enterprises (MNEs) has become a key component of development policies. Generous incentive packages are offered by governments to attract foreign direct investment (FDI), although few countries perform proper cost/benefit analyses. MNEs can have a decisive influence on the development path of countries, although the effectiveness of an FDI-assisted development strategy depends on a variety of factors. Net benefits depend not only on quantity, but also on the quality of FDI. Quality has to do with the MNE’s investment motivations, the affiliates’ mandate and autonomy, which in turn determine the potential for linkages and spillovers. These effects also depend on the capacity of domestic
firms to absorb, internalise and upgrade their knowledge assets. A sound FDI policy must not be exclusively concerned with attracting capital investment, but must prioritise enhancing the local embeddedness of the MNEs.
Globalization and subsequent changes in economic organization require both policy makers and scholars to reconsider their understanding of FDI and development. “FDI” and “MNEs” are no longer synonyms, as MNEs are increasingly able to control value chains without ownership through equity. Poor data and weak methodologies mean making realistic estimations of development effects is also increasingly fraught with difficulty. The tools to measure linkages and spillovers are increasingly outdated, as we cannot estimate non-equity engagements or knowledge flows, and this means we are unable to objectively judge if foreign investments have a net positive or negative effect, and whether such effects persist or attenuate over time.
The Modern MNE as an Efficient Meta-integrator: Emerging Market MNEs Need to Foster Internal Embeddedness to Succeed
Series Reference: JHD-2016-02
The modern MNE has to be a ‘meta-integrator’, able to leverage knowledge within and between its different constituent affiliates, which requires efficient internal markets and well-structured cross-border hierarchies. EMNEs will need to strengthen the ownership advantages necessary to achieve such internal embeddedness, which are hard to acquire, and must be learnt. I couch this discussion in the ongoing debate about the nature of ownership advantages. The ability to be competitive in an era of globalization depends as much on the EMNE’s technological assets as it does on its ability to achieve economies of common governance. The EMNE (like all MNEs) has to be able to promote internal knowledge flows, both to and from the parent, as well as between affiliates located in different countries, and the ability to achieve organizational, scale and scope economies.
Economic Institutions and the Location Strategies of European Multinationals in their Geographical Neighbourhood
Andrea Ascani Riccardo Crescenzi Simona Iammarino
Series Reference: JHD-2015-07
This paper investigates how the location behaviour of Multinational Enterprises (MNEs) is shaped by the economic institutions of the host countries. The analysis covers a wide set of geographically proximate economies with different degrees of integration with the ‘Old’ 15 European Union (EU) members: New Member States, Accession and Candidate Countries, as well as European Neighbourhood Policy (ENP) countries and the Russian Federation. The paper aims to shed new light on the heterogeneity of MNE preferences for the host countries’ regulatory settings (including labour market and business regulation), legal aspects (i.e.protection of property rights and contract enforcement) and the weight of the government in the economy. By employing data on 6,888 greenfield investment projects, the randomcoefficient Mixed Logit analysis here applied shows that, while the quality of the national institutional framework is generally beneficial for the attraction of foreign investment, MNEs preferences over economic institutions are highly heterogeneous across sectors and business functions.
The Importance of Domestic Capabilities for FDI-assisted Development: Lessons from Asia and Latin America
Series Reference: JHD-2015-05
This paper argues that the rapid growth of certain emerging economies over the last two decades is not only due to liberalised markets, MNEs and laissez-faire policies, but also to the effects of industrial development strategies that continue to share several similarities to the import-substitution industrialisation approach. The building up of capabilities in the domestic sector is crucial. At the same time, the heterogeneity in country experiences and their varying degrees of success at becoming internationally competitive indicates that understanding MNE assisted development requires us to go beyond just improving absorptive capacities. We also need to understand the role of political economy and issues of path-dependency in both policies and resources. I illustrate my arguments by contrasting the experiences of East Asian and Latin American economies.
Disentangling the Role of Modularity and Bandwidth in Entry Mode Choice: The Case of Business Services Offshoring
Stefano Elia Professor Rajneesh Narula Silvia Massini
Series Reference: JHD-2015-06
This paper investigates the role of modularity on entry mode choice of companies’ offshoring of business services. We distinguish between functional modularity, which reflects the possibility to subdivide a function into smaller modules, and architectural modularity, which reflects the interdependence between these modules. Lower architectural modularity requires greater interaction (greater ‘bandwidth’) between the organizational units to reintegrate the individual modules. Using modularity appropriately can decrease transaction costs and reduce the risks of knowledge leakages associated with offshoring, and improve the effectiveness of the sourcing process, thus increasing the probability that firms opt for less hierarchical entry modes. Firms that are less experienced with offshoring tend to underestimate the associated resources and costs of architectural modularity and select entry modes that do not provide sufficient bandwidth to efficiently reintegrate offshored modules, increasing the risk of failure of the offshoring initiatives. Our empirical analysis, which involves 490 offshoring initiatives, supports our arguments, especially in high-tech and knowledge-intensive industries.
The HRM of Foreign MNCs Operating in Europe
Dr Chul Chung Masayuki Furusawa
Series Reference: JHD-2015-04
Europe has been a major destination for foreign direct investment as one of the triad economies with the USA and Japan. MNCs have brought not just financial resources but also human resources and, in many cases, particular ways of managing workforces from their home base. Transferring HRM practices could be highly complex and challenging, as human resources are the most country-bounded resources. Foreign MNCs operating in Europe face cross-national challenges stemming from the process of transfer and adaptation of HRM practices, due to the uniqueness of European traditions as well as the national diversity within Europe in relation to employment relations. This paper examines how MNCs from three different countries – the USA and Japan, the two other triad economies, and South Korea, a home base of emerging MNCs – have dealt with the challenges in managing human resources in their European operations within the given institutional contexts.
A Set of Motives to Unite Them All? Revisiting the Principles and Typology of MNE Motives
Alvaro Cuervo-Cazzura Professor Rajneesh Narula
Series Reference: JHD-2015-03
We reflect on the background and evolution of the internationalization motives over the last few decades, and provide suggestions for how to use the motives for future analyses. We also reflect on the contributions to the debate of the accompanying articles of the forum.There continue to be new developments in the way in which firms organize themselves as MNEs and this implies that the ‘classic’ motives originally introduced by Dunning in 1993 need to be revisited. Dunning’s motives and arguments were deductive and atheoretical, and were intended to be used as a toolkit, used in conjunction with other theories and frameworks. They are not an alternative to a classification of possible MNE strategies.
This paper provides a deeper and nuanced understanding on internationalization motives for future research to build on.
Asset Recombination in International Partnerships as a Source of Improved Innovation Capabilities in China
Simon Colinson Professor Rajneesh Narula
Series Reference: JHD-2014-05
This paper examines how multinational enterprises (MNEs) and local partners, including suppliers, customers and competitors in China, improve their innovation capabilities through collaboration. We analyse this collaboration as a three-way interaction between the ownership specific (O) advantages or firm-specific assets (FSAs) of the MNE subsidiary, the FSAs of the local partner, and the location-specific assets of the host location. Our propositions are examined through a survey of 320 firms, supplemented with 30 in-depth case studies. We find that the recombination of asset-type (Oa) FSAs and transaction-type (Ot) FSAs from both partners leads to new innovation-related ownership advantages, or ‘recombinant advantages’. The study reveals important patterns of reciprocal transfer, sharing and integration for different asset categories (tacit, codified) and different forms of FSA and explicitly links these to different innovation performance outcomes. Ot FSAs, in the form of access to local suppliers, customers or government networks are particularly important for reducing the liability of foreignness for MNEs.
End-User Collaboration for Process Innovation in Services: The Role of Internal Resources
Mona Ashok Professor Rajneesh Narula Andrea Martinez-Noya
Series Reference: JHD-2014-03
This paper focuses on how to improve process innovation in service sectors. To do so, we analyse how the interplay of external knowledge sources (specifically, the intensity of end-user collaboration and the breadth of external collaboration) and the firm’s internal resources impact process innovation at the firm level. Survey data from 166 Information Technology Services firms provide the empirical data, which is tested using the partial least squares structural equation model. Our results demonstrate that benefits from collaboration are not automatic, as the firm's commitment of internal resources fully mediates the impact of the intensity of end-user collaboration and breadth of external collaboration on process innovation. Thus, internal resources become critical to make effective use of the knowledge residing both internally and externally, and key managerial practices that enable a firm to extract benefits from external collaboration are identified.
end-user collaboration, external knowledge sources, internal resources, process innovation,
The Viability of Sustained Growth by India’s MNEs: India’s Dual Economy and Constraints from Location Assets
Series Reference: JHD-2014-04
This paper considers the longer-term viability of the internationalization and success of Indian MNEs. We apply the ‘dual economy’ concept (Lewis 1954), to reconcile the contradictions of the typical emerging economy, where a ‘modern’ knowledge-intensive economy exists alongside a ‘traditional’ resource-intensive economy. Each type of economy generates firms with different types of ownership advantages, and hence different types of MNEs and internationalisation patterns. We also highlight the vulnerabilities of a growth-by-acquisitions approach. The potential for Indian MNEs to grow requires an understanding of India’s dual economy and the constraints from the home country’s location advantages, particularly those in its knowledge infrastructure.
Regional and Product Diversification and the Performance of Retail Multinationals
Chang Hoon Oh Timo Sohl
Series Reference: JHD-2014-02
Despite the importance of geographic expansion in the services sector, few studies have analyzed the relationships between international diversification, product diversification and performance for services firms. Here we investigate whether and how firms in the retail-trade sector may benefit by spreading their boundaries within and across regional boundaries. Using a panel data set of 68 large European retailers from 19 countries for the period between 1997 and 2010, we find that intra-regional diversification has a horizontal S-curve relationship and interregional diversification has an S-curve relationship with firm performance. Moreover, the results show that unrelated product diversification has a negative moderating effect on the relationship between inter-regional diversification and firm performance. Overall, these results add support in the services sector for the three-stage paradigm of international diversification and performance.
Keywords: Retail firms, geographic diversification, product diversification, regional diversification, performance, S curve.
How Home Country Weaknesses Can Constrain Further EMNE Growth: Extrapolating from the Example of India
Professor Rajneesh Narula Tiju Prasad Kodiyat
Series Reference: JHD-2014-01
This paper discusses the opportunities and limitations that the location-specific (L) assets of the home country represent for MNEs, particularly at the early stages of internationalization. The systemic weaknesses of the home country can constrain the long-term competitiveness of its firms, and ultimately, the competitiveness of its MNEs. It is the contention of this paper that many of the emerging countries have a constrained set of L assets from which their firms are able to develop ownership-specific assets. Are their economies developing improved L assets that will promote a new generation of EMNEs? We examine data for the case of India, an economy regarded as having considerable potential to expand to knowledge-intensive sectors. At the macro level, India’s performance is not different from countries of similar economic structure, and its current pockets of excellence are a reflection of its L assets. Our analysis suggests that the failure to foster and upgrade the L assets of emerging economies is likely to stunt the growth of their domestic firms, and ultimately any new MNE activity in the long-term.
|01||2011||Narula, R. and Nguyen, Q. "Emerging Country MNEs and the Role of Home Countries: Separating Fact from Irrational Expectations"||Download (PDF-303 KB)|
Rugman, A., Verbeke, A. and Nguyen, Q. "Fifty Years of International Business Theory and Beyond"
|Download (PDF-467 KB)|
Rugman, A., Oh, C. H. and Lim, D.S. K. "The Regional and Global Competitiveness of Multinational Firms"
|Download (PDF-567 KB)|
|04||2011||Narula, R. and Santangelo, G. D. "New Insights on the Role of Location Advantages in International
|Download (PDF-534 KB)|
|05||2011||Narula, R "Do we need different frameworks to explain infant MNEs from developing countries?"||Download (PDF-450 KB)|
Godley, A "The emergence of competence creating subsidiaries in UK pharmaceuticals in the 20th century"
|Download (PDF-550 KB)|
Godley, A "Entrepreneurial opportunities, implicit contracts and market making for complex consumer goods"
Almodóvar, P "The International Performance of Standardizing and Customizing Spanish Firms: The M Curve Relationships"
|09||2012||Nguyen, Q "The Regional Strategies of British Multinational Subsidiaries in South East Asia"||Download (PDF-414KB)|
|10||2013||Boselie, P and Brewster, C "At the Crossroads at Midnight: Strategic Human Resource Management now"||Download (PDF-570KB)|
|11||2013||Nguyen, Q and Rugman, A "Modern International Business Theory and Emerging Economy Multinational Companies"||Download (PDF-6.27MB)|
|12||2013||Rugman, A and Almodóvar, P "The M Curve and the Performance of Spanish International New Ventures"||Download (PDF-6.49MB)|
Narula, R, "Using a ‘Systems’ Perspective to Explain the Limits of ‘New’ Multinational Enterprises: the role of ‘members-only’ location advantages"
|14||2013||Akrivou, K "Self-ideal Congruence and Self Complexity: The constructs, their positive role for adult ego development and their relationship"||Download (PDF-369KB)|
|01||2014||Narula, R and Prasad-Kodiyat, T "How Home Country Weaknesses Can Constrain Further EMNE Growth: Extrapolating from the Example of India"||Download PDF|
|02||2014||Oh, C.H., Sohl, T and Rugman, A "Regional and Product Diversification and the Performance of Retail Multinationals"||Download PDF|
|03||2014||Ashok, M., Narula, R., and Martinez-Noya, A., "End-User Collaboration for Process Innovation in Services: The Role of Internal Resources"||Download PDF|
Narula, R., "The Viability of Sustained Growth by India’s MNEs: India’s Dual Economy and Constraints from Location Assets"
Collinson, S and Narula, R., "Asset Recombination in International Partnerships as a Source of Improved Innovation Capabilities in China"
Narula, R and Martínez-Noya, A., "International R&D Alliances by Firms: Origins and Development"
For more information please contact Daria Radwan, International Business and Strategy School Administrator by email at email@example.com or by phone on +44 (0) 118 378 6597.