Knowledge that Transforms

Building on insights from the multimarket competition and knowledge management literatures, this paper explores how multimarket overlap in knowledge activities influences firm decisions to internationalize their home-country generated innovations. I argue that higher multimarket overlap in knowledge activities with industry rivals pushes firms to internationalize and protect their innovations. At the same time, I argue that this strategic response will be attenuated for higher value firm innovations and in industries with higher global knowledge concentration across countries. Empirical results from a comprehensive panel of US MNCs and their worldwide family patents provide support for these arguments. While a higher overlap in knowledge activities with home and foreign rivals pushes firms to internationalize their innovations, this main strategic response is attenuated for higher value firm innovations and when industry knowledge is concentrated in fewer countries. Taken together, this paper extends the knowledge management literature by exploring how knowledge threats from home and foreign rivals impact the decisions of firms to transfer their innovations to foreign countries, while at the same time expanding the multimarket competition literature by offering new ways of identifying credible knowledge threats by rivals.

According to the springboard perspective, emerging market multinationals seek strategic assets aggressively from the outset. In this paper, we investigate the role of firms’ institutional embeddedness in terms of age and affiliation to business group on their aggressive internationalization pursuits, an issue which has remained less explored in international business scholarship. This study, based on 8163 Indian listed firms over 18 years, identifies a trend that younger firms founded in the liberalized era, post 1991, and unaffiliated firms are more likely to pursue aggressive internationalization by conducting their first cross-border acquisition (CBA) faster. Among affiliated firms, younger ones are relatively faster in conducting their first CBA. Furthermore, the evidence signals a moderating impact of inter-group heterogeneity in terms of group-level assets and foreign investments on the relationship between firm age and aggressive internationalization.

We show the relevance of extant international business (IB) research, and more specifically work on international human resources management (IHRM), to address COVID-19 pandemic challenges. Decision-makers in multinational enterprises have undertaken various types of actions to alleviate the impacts of the pandemic. In most cases these actions relate in some way to managing distance and to rethinking boundaries, whether at the macro- or firm-levels. Managing distance and rethinking boundaries have been the primary focus of much IB research since the IB field was established as a legitimate area of academic inquiry. The pandemic has led to increased cross-border distance problems (e.g., as the result of travel bans and reduced international mobility), and often also to new intra-firm distancing challenges imposed upon previously co-located employees. Prior IHRM research has highlighted the difficulties presented by distance, in terms of employee selection, training, support, health and safety, as well as leadership and virtual collaboration. Much of this thinking is applicable to solve pandemic-related distance challenges. The present, extreme cases of requisite physical distancing need not imply equivalent increases in psychological distance, and also offer firms some insight into the unanticipated benefits of a virtual workforce – a type of workforce that, quite possibly, will influence the ‘new normal’ of the post-COVID world. Extant IHRM research does offer actionable insight for today, but outstanding knowledge gaps remain. Looking ahead, we offer three domains for future IHRM research: managing under uncertainty, facilitating international and even global work, and redefining organizational performance.

Collinearity between independent variables is a recurrent problem in quantitative empirical research in International Business (IB). We explore insufficient and inappropriate treatment of collinearity and use simulations to illustrate the potential impact on results. We also show how IB researchers doing quantitative work can avoid collinearity issues that lead to spurious and unstable results. Our six principal insights are the following: first, multicollinearity does not introduce bias. It is not an econometric problem in the sense that it would violate assumptions necessary for regression models to work. Second, variance inflation factors are indicators of standard errors that are too large, not too small. Third, coefficient instability is not a consequence of multicollinearity. Fourth, in the presence of a higher partial correlation between the variables, it can paradoxically become more problematic to omit one of these variables. Fifth, ignoring clusters in data can lead to spurious results. Sixth, accounting for country clusters does not pick up all country-level variation.

As a counterpoint to Prashantham and Birkinshaw, I present an alternative model of MNE–SME cooperation where either type of firms can take the role of content provider or distributor. I argue that MNEs will interact with SMEs when there are differences in optimal scale between the content creation and distribution stages of the value chain, and it is not feasible or efficient for either party to vertically integrate between these two stages. I then build two 2 × 2 bundling models, one in which the SME provides content and the MNE distributes it, and another with the reverse configuration. In these 2 × 2s the axes are the transactional properties of the two complementary inputs, content and distribution, that MNEs and SMEs bundle to create value. I show that these models can explain the forms taken by MNE–SME cooperation and their dynamics.

A multinational enterprise develops its subsidiary portfolio by investing in new foreign markets and subsequently pursuing further investments within these host countries. We find that firms which locate their first equity investment closer to the national capital city can subsequently expand their subsidiary portfolio within the host country at a higher speed. This effect is particularly strong in emerging economies. Further analyses of various contingencies support the robustness of our findings. We discuss different theoretical mechanisms which could cause these effects, in particular face-to-face interactions with governmental actors and opportunities to develop political connections. Our research contributes to the literature on internationalization processes by analyzing how the initial location choice affects the development of the subsidiary portfolio.

We describe the extent to which the world’s largest companies (in terms of revenues), achieve sales around the globe, and have been able to penetrate markets outside of their home region. We try to answer the following question: Has there been a recent increase in the world’s largest firms achieving a global sales orientation, meaning a balanced, global distribution of sales? Rugman & Verbeke (2004) found that few of the 2002 Fortune Global 500 (Fortune Magazine 2002) firms, accounting for over 90% of the world’s stock of FDI, actually had a global sales orientation. A majority of multinational enterprises (MNEs) were home-region oriented, suggesting that much work on corporate globalization was normative, rather than accurately describing reality. We present the equivalent data for the 2017 Fortune Global 500 (Fortune Magazine 2017) list. Our data confirm that many large firms are still home-region oriented, but to a lesser extent than before, with 36 MNEs (up from only nine in the 2002 list), now having widely distributed sales across the world’s core economic regions. The question arises whether this relative increase in the number of MNEs with a global sales orientation holds any normative value for the firms that presently do not have such a sales distribution.

Whereas social network analysis has been associated with organizational aspirations, little is known on how firm’s structural positioning, and particularly network centrality, affects organizational aspirations to engage in international strategic alliances (ISA). This study examines the impact of network centrality on firm’s internationalization behavior within the ISA domain in response to the performance–aspiration gap. We build on social and behavioral perspectives to predict that network centrality and performance-based aspirations will be associated with the number of ISA the firm engages in. Using a sample of 7760 alliance collaborations from the top 81 global pharmaceutical firms for the period of 1991–2012, we find supporting evidence for most of our arguments.

This paper demonstrates the effectiveness of voting bias in the Eurovision Song Contest as a means of capturing societal affinity. More than 180 million viewers from more than 40 countries watch the Eurovision Song Contest every year and vote for their favorite songs. Societal affinity between participating countries leads to systematic bias in voting patterns as each song represents a country. Using cross-border mergers as a proxy for international business exchanges, we demonstrate how voting bias provides a simple, freely available, and dynamic means of capturing societal affinity between countries that complements other metrics of affinity and distance.

Much of the rising international connectedness of city-regions has developed from MNEs replacing local connections with (superior) international ones. This often creates local disconnectedness that energizes the current populist backlash against MNE activities. We develop approaches to new IB theory, addressing the interdependencies of MNEs and city-regions that we propose as a crucial avenue for future research. We contrast two generic MNE strategies. The first is the traditional one: the ‘global orchestration’ of resources and markets. We argue that it exacerbates local disconnectedness. The second, that we call ‘local spawning,’ involves engaging with the local entrepreneurial eco-system to create and renew local connectedness, diffusing populist responses. Some MNEs are better able to implement a local spawning strategy, due to industry factors like innovation clock-speed, and firm characteristics like organizational path dependency. Finally, we distinguish between disconnection, which is an outcome of MNE strategy, and global disruptions, like the coronavirus (COVID-19) pandemic, which are primarily stochastic events. Addressing disconnections requires MNEs to re-orient their strategies while dealing with disruptions requires undertaking risk mitigation. We present empirical evidence from city-regions around the world to illustrate our theory.