Knowledge that Transforms

A subsidiary mandate is a business, or element of a business, in which the subsidiary participates and for which it has responsibilities beyond its national market. This research studied thirty-one mandates in six Canadian subsidiaries of U.S.-owned multinational corporations. A life-cycle framework was proposed, and used to explore the factors associated with the gain, development and loss of mandates by subsidiaries. Two key findings emerged. First, it was shown that there is a risk in having a full-scope world product mandate, because it is possible to become marginal to the corporate strategy. Second, it was observed that the engine of subsidiary growth is its distinctive capabilities, and that for a mandate to be effective it must be built on those capabilities. Implications for mandate sustainability are proposed on the basis of these two insights.

This reply summarizes the major findings of Dunne and Ndubizu [1995] and addresses the comments of Nobes [1996]. The assumptions underlying the tax hypothesis [Dunne and Ndubizu 1995] are reviewed. A possible suggestion for a direct test of the hypothesis is presented as well as the requirements for the falsification of a hypothesis.

This paper employs a simple stochastic model to investigate how transaction cost and strategic option considerations interact to influence a firm's evaluation of collaborative venturing as a market entry mode. After demonstrating how uncertainty about the market and about the potential partner can add to the value of a collaborative venture, the paper explicates a condition under which the option to acquire or sell out generates a positive economic value for both of the partners. The interaction of transaction cost and strategic option considerations is then examined, and a number of testable hypotheses are proposed based on the theoretical analyses of the paper.

In this paper, we suggest that the dominant motives for firms investing in Advanced Industrial Nations or Developing Countries (AINs or DCs) tend to be different. These dissimilar principal motives manifest themselves in aggregate impacts on national trade balances. Using market imperfections theory and borrowing from Root [1977], we suggest that firms generally tend to use FDI in AINs for market access and penetration, increasing host-country import levels. Firms tend to use FDI in DCs in order to gain resource advantages that can be exploited in export markets leading to increased exports and hence, trade surpluses. A contingency framework which outlines the conditions under which FDI inflows will be related to national trade surpluses and/or deficits, based on the dominant strategic motives of the investing firms, is presented and tested. Our findings suggest that the relationship between FDI inflow and trade balance is moderated by whether a country is an Advanced Industrial Nation or a Developing Country. In the Limitations and Future Research sections of the paper, readers are cautioned to view the findings as research opening rather than as definitive. Recommendations for future research are also discussed.

Sullivan's [1994] suggestion that an index measure of the internationalization construct is superior to single-variable measures is critiqued on psychometric, content validity, criterion validity, reliability, and utilitarian grounds. We argue that internationalization is more complex than envisioned by this index and suggest that further refinement of the construct is necessary before constructing indices.

In this paper we examine organizational characteristics, structural mechanisms and contextual factors that influence knowledge acquisition from the foreign parent in international joint ventures (IJVs). We in turn relate assessments of knowledge acquisition to IJV performance. The data come from a survey of IJVs in the Hungarian context, where learning and knowledge acquisition from the foreign parent is thought to be particularly critical. Adaptation mechanism, such as capacity to learn, articulated goals, and structural mechanisms, such as the provision of training, technology and managerial assistance by foreign parents, all were positively associated with the degree to which IJVs reported acquiring knowledge from their foreign parents. We also found limited support for the belief that cultural conflicts can impede knowledge acquisition, but only two-party joint ventures with 50/50 equity arrangements. We also looked at the relationship between knowledge acquisition and different dimensions for evaluating IJV performance. The relationship between knowledge acquisition and performance was significant for all indicators of performance, through knowledge acquisition from the foreign parent and the organizational characteristic hypothesized to enhance IJV knowledge acquisition affected assessments of some dimensions of performance more than others. Our findings contribute to advancing knowledge about the relationship between organizational characteristics and organizational knowledge acquisition in IJVs, as well as relationships between knowledge acquisition and different dimension of IJVs performance.

Research conducted primarily in the United States has shown that interpersonal influence arising from opinion exchange behavior is an important factor in consumers' product adoption and brand choice decisions. An important managerial question in the international arena is whether information-giving and seeking behaviors depend on culture. In a study representing eleven nationalities, we explore the role of culture in moderating consumers' opinion exchange behavior. Results indicate that the cultural characteristics of power distance and uncertainty avoidance [Hofstede 1980] influence the focus of consumers' product information search activities, but not their tendencies to share product-related opinions with others. Following earlier opinion leadership studies, we find that individual characteristics such as product category interest and involvement are most indicative of active opinion leadership behavior.

This study examines post-listing equity price performance of foreign firms which cross-listed sponsored American Depository Receipts (ADRs) on the New York and the American Stock Exchanges during the period 1982-1992. We use three valuation metrics – price-to-book, price-to-cash-earnings, and price-to-earnings – which are adjusted for the home country and world industry indices to which the listing firm's stock belongs. We find positive valuation effects associated with cross-listing for both country-benchmarked and industry-benchmarked price ratios. Variables that proxy for home country characteristics such as governance styles, disclosure quality, market liquidity, and so forth are unable to explain the cross-sectional variation in the data. Our results thus suggest that cross-listing in the U.S. enhances valuations for listing firms by simply reducing the overall effect of segmentation among different national securities markets.