Knowledge that Transforms

The lifetime of foreign equity partnerships is often limited. Research suggests that MNCs abandon their local partners when the need for sharing ownership in foreign subsidiaries has diminished. This study shows that MNCs may abandon their local equity partners to reap the benefits of multinationality: as MNCs gain a competitive advantage from leveraging resources across borders, they will initially benefit from sharing ownership with a local firm, to embed their foreign subsidiaries in the local environment and access local resources more effectively. Later, they will benefit from taking over the local partner’s equity share, to better embed their subsidiaries in the parent organization and transfer locally accessed resources to the MNC’s other locations. Moderated-mediation regressions provide evidence of such practice in the context of cross-border transfers of capital resources. This strategy seems to work: as a corollary of our model, panel regressions suggest that sharing ownership with local firms in a host country with a capital resource advantage is associated with appropriating more capital resources from the local debt market, while abandoning these partner firms later is associated with transferring more capital resources from this host country, via internal capital markets, to other parts of the MNC.

Our work examines the impact of country-dyadic military conflicts on market reaction to cross-border acquisitions (CBAs). Building on intergroup relations research, we theorize that country-dyadic military conflicts, weighted by their severity, trigger intergroup conflicts between the merging firms and, in so doing, hamper market reaction to CBA. Drawing on a sample that comprises 7321 CBAs between 1988 and 2011, we find that country-dyadic military conflicts reduce acquirer returns following CBA announcements and that cultural similarity between acquirer and target countries weakens the relationship between military conflicts and market reaction to CBA while colonial ties between the countries, the target country’s national pride, and the target’s firm size reinforce the relationship. Our study contributes to an emerging body of work that examines the role of international politics/relations in international business.

This study examines the influence of parent firm reputation risk on the level of corporate social responsibility activities of foreign subsidiaries. We first argue that a strong reputation risk spillover occurs from parent firms to their foreign subsidiaries due to the high visibility of multinationals, the control of parent firms over their subsidiaries, and the liability of foreignness associated with foreign firms in host countries. Then, we argue that subsidiaries may resort to CSR in their host country to reduce the spillover effect. Thus, we hypothesize a positive relationship between parent firm reputation risk and foreign subsidiary CSR activities. Moreover, we explore several contingency factors at both the parent firm and subsidiary levels that affect the extent of spillover and the need for subsidiaries to use CSR as a buffer against parent firm reputation risk. We find that the positive relationship between parent firm reputation risk and foreign subsidiary CSR activities is weaker for foreign subsidiaries that directly report to the parent firm, with longer operations in the host country and larger institutional distance between host and home countries. Using a unique sample of subsidiaries of large multinationals in China from 2009 to 2016, we find general support for our arguments.

Building on Daniel Levinthal’s seminal theories on learning, adaptation, and innovation, this article elucidates an adaptive view of organizational learning undertaken by multinational enterprises (MNEs). Levinthal’s perspectives have tremendous implications for theorizing and examining processes, pathways, and mechanisms of dynamic learning for MNEs competing in a complex environment. This article extends these perspectives, considering unique organizational traits and environmental characteristics facing MNEs for a more nuanced understanding of contexts in which adaptive learning creates global competitive advantage. Discussion also includes Levinthal’s perspectives that are not yet adequately extended to, but valuable for, IB research, such as learning mindfulness, cognitive search, organizational architecture for adaptation, and co-evolution with technological change. We offer additional research questions as well as possible solutions to adaptive learning for international business.

International business researchers commonly estimate proportions, percentages, rates, or fractions – so-called “proportional dependent variables”. In this paper, we posit that two regression strategies are particularly pertinent to the international business field: Tobit and fractional regression. Reviewing recent international business research, we find that, while fractional regression is rarely used, analyses from Tobit regression are often incomplete or erroneously interpreted with consequences for the validity of the reported results. Accordingly, we clarify how researchers should choose between Tobit and fractional regression and interpret their results. We present insights based on simple simulations and data examples with associated Stata code and a decision tree for choosing between types of models for use with proportional dependent variables.

Although international business scholars have begun to recognize the division of entrepreneurial labor between MNEs and SMEs, there is a fragmented understanding of the different forms MNE–SME cooperation can take. We develop a typology that takes into account not only complementarity of capabilities but also, crucially, the compatibility of intent between MNEs (exploration vs. exploitation) and SMEs (international vs. domestic orientation). The framework offers a novel way to understand the forms and dynamics of MNE–SME cooperation. We also show how it can be applied more broadly, by considering its application to societal challenges, such as achieving the United Nations’ Sustainable Development Goals.

Multinational teams are an organizational reality, but they present several challenges. The literature suggests that individuals with multicultural identities are more likely to show behaviors that aim at improving intercultural interactions in multinational teams, though scholars have yet to determine the precise nature of these behaviors. We address this research gap in a multimethod two-study design by identifying five team cultural gap bridging behaviors (CGB behaviors: facilitating, translating, integrating, mediating, and empathetic comforting). In Study 1, we draw on one qualitative and two quantitative datasets to identify within-team CGB behaviors and develop a measure of CGB behaviors. In Study 2, drawing from two-wave survey data, we investigate and find support for the direct relationships between cultural identity plurality and CGB behaviors and the indirect relationships via cultural intelligence.

Do cross-country differences in labor regulations shape (1) acquiring firms’ announcement returns and post-acquisition profits, costs, and revenues from cross-border deals, (2) the selection of cross-border targets, or (3) the success rates of cross-border offers? We discover that acquiring firms enjoy smaller abnormal returns and post-deal performance gains with targets in stronger labor protection countries; acquirers are more likely to purchase labor-dependent targets in weak labor regulation countries and more likely to use cross-border acquisitions to enter new markets when targets are in stronger labor regulation countries; and offer success rates fall when targets are in stronger labor regulation countries.

In this commentary, I argue why we should stop engaging in null hypothesis statistical significance testing altogether. Artificial and misleading it may be, but we know how to play the p value threshold and null hypothesis-testing game. We feel secure; we love the certainty. The fly in the ointment is that the conventions have led to questionable research practices. Wasserstein, Schirm, & Lazar (Am Stat 73(sup1):1–19, 2019. 10.1080/00031305.2019.1583913 ) explain why, in their thought-provoking editorial introducing a special issue of The American Statistician : “As ‘statistical significance’ is used less, statistical thinking will be used more.” Perhaps we empirical researchers can together find a way to work ourselves out of the straitjacket that binds us.

This paper investigates the effect of investor protection on the value impact of stock liquidity. Using a sample of firms from 40 countries for the period between 1996 and 2010, we show that investor protection is positively associated with the value impact of stock liquidity. This association is robust to the difference-in-differences approach based on a natural experiment. Further evidence shows that the positive effect of home-country investor protection on the liquidity–valuation association attenuates in countries with globally integrated capital markets.