Knowledge that Transforms

Even though international marketing has been challenged because of theoretical and methodological shortcomings, very few researchers have actually attempted to analyze the weaknesses based on principles of theory evaluation. In this article, the author examines two types of models addressing the individual firm's internationalization process. A theory evaluation is performed based on the explanation and the falsification criteria. In order to improve the internationalization models, some measures are proposed.

This paper analyzes the location of export-oriented manufacturing investment. The analysis focuses on direct investment in the Caribbean Basin, using micro data for all reported manufacturing plant openings from 1984–87. We test a broad range of influences on country selection and compare the results with the existing literature on foreign direct investment in less-developed countries. The probability of country selection was estimated with a conditional logit model. The estimates were then used to predict the location of Caribbean Basin investments made in 1988 and 1989. Twelve independent variables were tested. Six variables had a statistically significant, positive relationship with plant location: per capita GNP, exchange rate devaluation, the length of income tax holidays, the size of free trade zones, political stability, and manufacturing concentration. Negative relationships were found for the wage rate, inflation rate, transportation cost, and profit repatriation restrictions.

The globalization of financial markets has seen ever-increasing numbers of firms choosing to list their stocks on foreign exchanges. We examine whether the extent of economic and financial market integration (or segmentation) between a firm's home country and listing country influences stock price reaction by examining the case of two “similar” countries: the U.S. and Canada. During the 100 days before the week of interlisting in the U.S., (risk-adjusted) stock prices of Canadian firms rise (on average) by over 9.4%, rise by an additional 2% around the interlisting date, but follow with a corresponding drop of 9.7% in the 100 days after interlisting. We interpret this evidence to be consistent with the financial market segmentation between Canada and the U.S. However, a subsample of Canadian resource firms does not exhibit these stock price effects, suggesting industry-related factors may also be an important determinant of integration. We also find average trading volume in interlisted stocks more than doubles in the months following interlisting.

This is a study of component sourcing decisions of European and Japanese manufacturers for supplying their manufacturing operations in their home countries for export to the U.S. as well as their operations in the United States. Specifically, employing data from seventy-one multinational manufacturers of European and Japanese origin operating in the U.S., the study investigated the determinants of international sourcing decisions. The authors found support for the hypothesis that international sourcing could be explained using international plant location theory. The significance of this finding is that it offers a new theoretical framework to spur much needed research on the topic of international sourcing.

This exploratory study examines five antecedent conditions of organizational commitment among groups of American, Dutch, Israeli and British managers in six multinational banking corporations. Role, nationality, age, seniority, and rank are tested as correlates of the organizational commitment construct among three groups of managers: Headquarters (HQ) officials, expatriate managers, and host-country managers in foreign subsidiaries.

We examine relationships between firm performance and changes in international presence in five medical sector industries between 1978 and 1989, conditioned on the international status of the industries and the market position of the firms. International expansion was necessary for survival when foreign firms began to enter a domestic market, but only firms with substantial market share and international experience, gained prior to the industry transition, could expand successfully. Operating only in the home market may permit a firm to survive in a primarily domestic industry, but moderate international expansion often brings current benefits and provides a base for future success should the industry become more global. However, expansion carries the risk of failure: firms that retrench after expanding internationally disappear.