Knowledge that Transforms

In this paper, we examine the effect of differential corporate taxes on the debt denomination decision of U.S. multinational firms facing stochastic project cash flows and exchange rates. Assuming to international interest arbitrage opportunity, we show that U.S.-based multinational firms can maximize projects' expected NPVs by borrowing in the foreign currency, as long as the excess foreign tax credit can be fully utilized by the parent firm. Otherwise, multinational firms should borrow the weaker currency when a lower exchange rate is expected. The effect of differential tax rates on the risk of multinational projects with different debt-denomination alternatives also is examined.

Drawing upon complementary streams of research from the international production and manufacturing strategy literature a conceptual framework was developed that identifies the major internal and external factors that may influence a firm's international manufacturing configuration (IMC) decisions. The framework was then examined using sixteen companies drawn from four distinct industry sectors. The findings indicate that a firm's competitive priorities, expressed as the differential emphasis placed on four key manufacturing performance priorities, in addition to other key variables such as market orientation, experience, and product characteristics, play important roles in the development of IMC strategies.

As part of Indonesia's opening to the world economy, over the past several years Indonesian firms have begun to invest abroad. This study compares Indonesian firms that have invested abroad and those that have not and with Third World Multinationals and other MNEs. It found that the performance of Indonesian firms that invested abroad improved dramatically after their investment in terms of management expertise, exports, quality, and costs relative to their past performance and relative to the other firms in the sample. These results support a conclusion that Indonesian multinationals have gone abroad not only to exploit their ownership advantages but also to access and develop ownership advantages they did not previously possess.

Many American and Canadian companies seeking to form joint ventures and alliances with Japanese companies, or to negotiate contracts with them, have discovered that the interaction can be difficult and frustrating. Value differences and preferences for different management practices have been identified that contribute to these interaction problems. However, little research has investigated potential differences in cognitive style that might also contribute to intercultural conflict. This study compares samples of Canadian and Japanese MBA students using the Myers-Briggs Type Inventory (MBTI) and links the findings to interaction difficulties reported in the literature.