IBS Lunchtime Research Seminar - Reconfiguring Global Value Chains through Sequential Foreign Investment: From Function Matching to Function Upgrading

You are cordially invited to attend an International Business and Strategy Departmental Research Meeting, during which there will be a presentation by Dr Ha-Phuong Luong, Henley Business School. A reminder that attendance for IBS (full time, research oriented) staff and full-time students is compulsory, and where possible, must be in person. Individuals unable to attend in person, due to legitimate reasons will be provided a Teams link on request. Non-IBS staff are welcome to attend. If you have not received the email invite please email Angie Clark

Please join us in Room 108, Henley Business School.

Please make sure you let me know in advance if you intend to attend in person so that the correct amount of catering is booked.

Date: Wednesday 14th October 2026, HBS Room 108

Time: 13.00 - 14.30

Abstract:

Global value chains (GVCs) are increasingly dynamic as multinational enterprises (MNEs) continually reconfigure the geographic and functional organization of their activities. Yet little is known about how firms’ activities within host countries evolve through sequential foreign investment: why some investments extend existing functions whereas others introduce new ones, or why functional upgrading sometimes proceeds incrementally and sometimes leapfrogs intermediate stages. Drawing on organizational learning and location-advantage perspectives, we examine these dynamics using project-level data on 34,164 foreign investments undertaken by U.S.-incorporated MNEs between 2008 and 2023, from which we identify 11,214 sequential functional transitions within firm–host-country pairs. Three stylized facts emerge. First, functional persistence dominates sequential foreign investment: firms are substantially more likely to reinforce existing activities than to alter their functional configuration. Second, although MNEs invest frequently within host countries, their host-country functional portfolios upgrade comparatively slowly, with distinct transition pathways across commercial, operational, and knowledge-intensive activities. Third, functional reconfiguration occurs more rapidly in institutionally stable host countries. Beyond these patterns, empirical evidence show that accumulated host-country experience increases the likelihood of functional upgrading but makes such upgrading more likely to proceed incrementally rather than by leapfrogging intermediate functional stages. Host-country institutions further shape both the likelihood and form of upgrading, with de facto institutional conditions exhibiting a more consistent relationship with functional transitions than de jure institutional arrangements. Evidence for the role of host-country government stability, however, only works for functional change, but not with leapfrogging. Together, these findings show that the evolution of MNEs’ functional architecture across locations is a path-dependent process shaped jointly by prior organizational experience and host-country conditions.