Knowledge that Transforms

Many researchers have pointed out that it is necessary to ensure measurement equivalence in cross-national comparative research. Three aspects of measurement equivalence, translation, metric, and calibration equivalence, are necessary to establish the cross-national reliability and validity of items used to measure theoretical constructs. This paper discusses these issues and proposes two recently developed empirical techniques, Multiple Group LISREL and Optimal Scaling, for use in diagnosing cross-national measurement equivalence. These techniques are illustrated by reanalysis of a pioneering U.S. and Japanese study. The two techniques yield convergent results, indicating measurement equivalence for some, but not all, ordinal-level items under consideration. The findings demonstrate that the proposed methods are useful diagnostic tools for exploring measurement equivalence. Several suggestions for reducing the likelihood of problems with measurement equivalence and a number of methods for dealing with items where lack of equivalence persists are also discussed.

This study examines linkages between business strategy and human resource management (HRM) strategy in Japanese subsidiaries in the U.S. It investigates whether or not fit between a subsidiary's business strategy and its HRM strategy is associated with higher performance. The data show that subsidiaries with matched strategies performed better than unmatched ones in terms of HRM-related performance measures such as rates of promotion and turnover. Japanese subsidiaries with a business strategy/HRM strategy match were also more likely to experience better business performance versus competitors than were unmatched ones.

A three-fold typology of subsidiary roles (world mandate, specialized contributor, local implementer) was induced from the literature and its empirical validity was confirmed. Adopting a configurational approach, we then explored the ways in which subsidiary ‘structural context’ varies across subsidiary role types. Structural context characteristics were determined through a discussion of the underlying principles of the ‘hierarchy’ and ‘heterarchy’ models of multinational organization. The key findings were: (a) higher strategic autonomy in world mandates than in local implementers; (b) a more internationally configured value-chain in world mandates and specialized contributors than local implementers; (c) lower levels of internal product flows in world mandates than the other two types; and (d) a significantly lower performance in specialized contributors. Implications for a configurational model of subsidiary management, and for heterarchy as a higher level conceptualization, are discussed.

Hofstede and his associates have presented statistical evidence purporting to identify a link between national culture and economic growth. This note describes two problems with this line of research. First, two of the dimensions of culture used in this research, individualism and Confucian dynamism, are treated as if they are independent when in fact they appear to be highly interrelated. And second, culture is not a sufficient condition to explain economic growth and is related to other important factors that play a role in determining economic growth. The consequences of these problems on interpretation of the research findings are discussed and recommendations for future research directions are proposed.

This study aims to enhance our understanding of multiple listings by addressing the where question related to foreign listings. It examines factors that influence firms' choices of foreign stock exchanges. Based on a sample of 459 internationally traded MNCs, with at least one foreign listing on one of nine major stock exchanges (in eight countries) at year-end 1992, we find strong evidence that foreign listing locations are significantly influenced by 1) financial disclosure levels, and 2) the level of exports to a given foreign country.

Substantive inference from cross-national studies have important implications for theory (e.g., because they reveal insights into generalizability and boundary conditions) and managerial practice (e.g., because they offer guidelines to MNC managers). However, few empirical studies attend to measurement issues involved in cross-national research, and still fewer recognize the risk of inferential errors that are likely to occur by overlooking measurement issues. We discuss four measurement issues, namely (1) standardized versus unstandardized coefficients, (2) the impact of measurement error and unequal reliability, (3) the overall error rate and simultaneous analysis and (4) construct equivalence. Using illustrate examples we demonstrate the nature of each of these problems, the likely impact they can have on substantive conclusions, and approaches for tackling these problems. Additionally, we reanalyze a recently published three-nation study by Dubinsky, Michaels, Kotabe, Lim and Moon [1992] to clarify these measurement concerns, highlight a methodological approach, and delineate the extent and severity of inferential errors. Our reanalysis shows that the interactive effects of these measurement issues are pervasive, complex and unpredictable. We close with implications for cross-national research in general.

This paper examines the response to the creation of the European Union by firms located outside the European Community that seek to serve its markets. Analysis of some of the major steps taken by the European Community to complete the internal market shows that the relative competitive position of outsiders is expected to deteriorate, even if the concept of “Fortress Europe” is rejected by the Community.

This paper examines the determinants of foreign investment shares in the manufacturing sector of Indonesia, a large, rapidly industrializing developing country with a comparatively rich industrial database. Particular emphasis is given to the interplay between ‘industrial organization’ and ‘policy’ factors in determining these shares. Most of the industrial organization factors were found to be significantly correlated with ownership shares, although the two variables capturing intangible assets were not. Two of the three policy variables were found to be significant. Since the policy regime in developing countries is typically more interventionist than that in OECD economies, this suggests that studies of the former ignore the policy context at their peril. It is also demonstrated that the results of these types of studies are sensitive to the precise definition of ‘foreign ownership’.

This paper reports the results of a large-scale survey among senior executives in the U.S., the U.K., Germany and Austria. The research provides empirical evidence on the variation of perceptions of ethical issues by country and type of firm. Our findings suggest that country and industry type have significant effects, both with regard to identification of ethical problems and the comprehensiveness of written ethics policies and ethics training.