Knowledge that Transforms

Employees with relevant knowledge and skills for digitalization have become increasingly important for the competitiveness of MNCs. However, the shortage of such digital human capital in many host countries is putting pressure on MNC subsidiaries to prevent these employees from leaving. We theorize that the retention of digital human capital in MNC subsidiaries does not merely depend on salaries but crucially on the learning opportunities that subsidiaries offer. By integrating mechanisms from the literature on subsidiary-specific advantages into theoretical models explaining voluntary mobility constraints of employees, we reason that the opportunities for acquiring new skills in subsidiaries with advanced digital expertise will reduce the odds of losing these valuable employees. We test our theoretical predictions for 11,598 employees with digital human capital working for 866 foreign MNC subsidiaries in Denmark observed between 2002 and 2012. We find that digital expertise helps retaining digital human capital. The effect is stronger if subsidiaries have an internationally diverse workforce and when they possess patented technologies. Both factors provide distinct learning opportunities from digital expertise. The effect is weaker if the subsidiary is located in regional clusters of digital expertise since alternative employers may offer similar learning opportunities.

We conjecture that angel investment in entrepreneurial firms depends on two types of bankruptcy laws around the world. Corporate bankruptcy laws impact investor terms and incentives to finance risky entrepreneurs, particularly given reforms that brought about a time-efficient, simplified, and clear process in recent years in some countries. Personal bankruptcy laws impact entrepreneurial motivations to engage in risk-taking and entrepreneurship and thus affect the demand for angel financing. In this paper, we examine 35,752 angel investments from 72 countries from 2000 to 2020 and compare the relative importance of corporate and personal bankruptcy laws for angel investment activities. The data indicate that corporate bankruptcy law reforms and personal bankruptcy law reforms both positively influence angel investment activities. The data further suggest that countries that reformed both laws had the most pronounced improvements in angel activities. These findings are robust using a quasi-experimental approach of the difference-in-differences method, clustering standard errors, and excluding U.S. observations, among other strategies.

What can MNEs learn from the COVID-19 pandemic? IB scholars have provided ample insights into this question with many focusing on risk management. Complementing these insights, we argue that MNEs should also consider the long-lasting effect that COVID-19, inter alia, had on the institutional logic underlying globalization. The U.S. and its allies have redefined their logic from pursuing cost-reduction to building partnerships based on shared value, aiming to substitute China’s role in the world economy. The geopolitical pressure for decoupling from China is the source of ‘new’ vulnerability of globalization. Such pressure is counteracted by economic rationality, creating unsettled priority between the globalization and deglobalization logics at the macro-level institutional space. Combining both risk-management and institutional logic perspectives, we develop a more comprehensive framework on how MNEs should respond to these challenges. This paper contributes to the debate regarding the impact of COVID-19 on globalization, suggesting that neither globalization nor deglobalization logics will prevail in the short run, and IB will likely be more fractured in the long run, based on not only geographic but also ideological and value propinquity. In strategic sectors, the balance will shift toward bifurcation while in others the balance will shift toward the globalization logic.

All business contributes to environmental crises because of its focus on profit. We argue that international business (IB) contributes more than its fair share. IB's focus on cross-border arbitrage has led to the over-extraction of natural resources and the accumulation of waste. This is a problem because natural resources are limited in quantity and embedded in their local environment. It is time for IB researchers to step up and substantially and meaningfully address IB’s contribution to environmental crises by embracing the principles of natural systems processes within its core assumptions and improving its theorizing of natural resources. In this paper, we take a step forward in this direction by revisiting and refining the theoretical dimensions of country-specific advantages (CSAs) and firm-specific advantages (FSAs) to recognize natural resources more explicitly. We propose three natural resource-based strategies for multinational enterprises (MNEs): reducing, replacing, and regenerating. This article offers a new theoretical perspective on understanding how IB can create value and steward the natural environment, contributing to the sustainability of business, society, and the planet.

Rising inequality is one of the grand societal challenges of our time. Yet, its effects on firms – including multinational enterprises (MNEs) – and their operations have not been widely examined by IB scholars. In this study, we posit that income inequality within a country is positively associated with the incidence and severity of crime experienced by businesses. Further, we propose that this relationship will be negatively moderated by social cohesion (in the form of greater societal trust and lower ethno-linguistic fractionalization) in these countries, such that social cohesion helps to offset the negative impacts of inequality on crime against businesses. We test these hypotheses using a comprehensive data set of 114,000 firms from 122 countries and find consistent support for our theses. Our findings, which are robust to different alternative variables, model specifications, instrumentation, and estimation techniques, unpack the intricate ways through which inequality affects businesses worldwide and the associated challenges to MNEs. They also offer important managerial and policy insights regarding the consequences of inequality and potential mitigation mechanisms.

This Research Note provides an assessment of the burgeoning interdisciplinary literature surrounding the COVID-19 pandemic and its impact on both individuals and firms, with a particular focus on the heterogeneity in government responses and their implications for international finance and IB research. In particular, we discuss disparities in vaccine distribution, government policy responses, and impacts in low-income versus high-income countries, as well as lessons learned from the pandemic. We describe an important source of data in this area and provide ideas for future research.

Transaction costs economics work has argued that monitoring procedures are needed to evaluate the extent to which overseas partners comply with their obligations. We posit that the transactional theory of stress can also inform on how to distinguish opportunists from non-opportunists. Synthesizing these two theories and using a three-study, multimethod design, we examine whether different types of stressors influence opportunism, and how and under what conditions such links are moderated by monitoring. Based on separate surveys of 209 Chinese subsidiaries’ and 232 Chinese suppliers’ cross-border intrafirm and interfirm partnerships with headquarters and buyers, respectively – in conjunction with an add-on experimental study conducted in the US – the results suggest challenge and hindrance stressors impact opportunism differently. The former exhibits a U-shaped, and the latter a positive, relationship with opportunism. We thus observe the importance of both the level and type of stress. Further, the international exchange context matters for monitoring’s efficacy. Monitoring steepens the U-shaped challenge stressors–opportunism relationship in intrafirm (not interfirm) partnerships. It however weakens the positive hindrance stressors–opportunism relationship in interfirm (not intrafirm) partnerships. The findings inform managers on when and how to use monitoring to control challenge and hindrance stressors’ links to opportunism in these contexts.

Social networks have gained increased attention as a lens to understand employee creativity around the world. We propose that a complete understanding of whether and when structural holes and tie strength are conducive to creativity requires considering the cultural tightness of the country in which individual creators are embedded. Building on the diversity–bandwidth trade-off identified in network research, we theorize that, in culturally tight countries, where knowledge diversity is the primary need, structural holes and low tie strength (i.e., network characteristics that provide knowledge diversity) have a stronger positive effect. Conversely, in culturally loose countries, where knowledge bandwidth is the primary need, cohesive networks and higher tie strength (i.e., network characteristics providing knowledge bandwidth) are more likely to enhance creativity. We find evidence in support of these predictions using meta-analytic data synthesizing more than 30 years of research. These findings point to the importance of considering the tightness of cultural context when constructing networking actions and strategies to foster individual creativity.

Many consumer goods multinational companies (MNCs) operate host-market subsidiaries that are responsible for managing relationships with local retailers. These retailers often follow a decentralized approach by formally involving their store managers in key decision-making processes related to the MNCs’ brands. While store managers play a key role in the success of MNCs’ brands, two key questions remain unanswered: (1) what drives a store manager’s psychological engagement with MNCs’ brands across cultures, and (2) do cultural differences matter to translating store managers’ psychological brand engagement into constructive brand voice behavior? We answer these questions using a multilevel dataset spanning nine Latin American countries/MNC subsidiaries, five data sources, and three time periods. The findings reveal that uncertainty avoidance exerts a differing moderating influence on the relationship of MNC–retailer relationship investment and the store managers' MNC brand knowledge with psychological brand engagement, whereas individualism and uncertainty avoidance positively moderate the effect of MNC’s extra-contractual incentives on store managers' psychological brand engagement. Also, psychological brand engagement takes on a more important role in leading store managers to speak up, at lower levels of long-term orientation. Finally, we show that inducing store managers to engage in constructive brand voice behavior increases time-lagged, objective data on MNC’s salesperson performance.

Young management scholars often wonder to what extent they should emphasize international business scholarship in their career. In this commentary, we argue that, in addition to its intellectual merits, publishing in the leading outlet in the field, Journal of International Business Studies (JIBS), also pays financially on a par with publishing in other top management journals. Our claim is based on an analysis of the impact of JIBS publications on a strategy faculty’s nine-month salary for a sample of 396 strategy professors from the business schools of 59 research-oriented US public universities from 2015 to 2019. Employing multilevel modeling, we find that publishing in JIBS significantly increases faculty’s annual salary by, on average, more than US$3,000, which is equivalent to the salary gains for publishing in leading general management and strategy journals. Thus, the recognition of JIBS is on par with that of other top management journals, and IB as a field of study is a financially rewarding career path. Moreover, JIBS may offer a blueprint for other business and management journals to build reputation by continuously publishing papers with high standards that continuously develop insights and theory relevant to contemporary business.