Knowledge that Transforms

International business scholars have successfully applied transactions cost economics theories of the firm to understand a wide variety of global business phenomena. However, because this theory takes the value of a global exchange as given, and then examines how to organize this exchange most efficiently, it cannot be considered a “strategic theory of the firm.” Some of the key elements of such a strategic theory of the firm, and how their introduction to international business research could change both theory and practice, are discussed.

The literature has long acknowledged the impact of stereotypical associations with a product’s country of origin (COO) on consumers’ cognitive assessments of the product. However, consumers’ emotional reactions to a product’s COO can also influence their decisions. For example, the literature reports a monotonically negative relationship between consumer animosity (CA) and the purchase of products from an animosity-evoking country. The literature provides an incomplete picture though because it does not consider other factors that may transform this negative relationship. Drawing on theories of the interplay between affect and cognition in decision-making, this research investigates the nuanced interaction between CA and product country image (PCI). Using samples from the United States, China, Japan, and South Korea, we find that the monotonically negative impact of CA holds only when the target country’s PCI is unfavorable. When PCI is favorable, we find an inverted U-shaped relationship between CA and purchase intentions – that is, CA has a positive effect on purchase intention as it increases from low to moderate levels and a negative effect as its magnitude escalates beyond a threshold. These findings offer new insights to address the complexity of market entry modes, segmentation, targeting, positioning, and communication decisions in international markets.

Managing multinational enterprise subsidiaries is a core facet of international business research. A shifting reality on the ground has triggered concerns around the waning relevance of the subsidiary because the MNE and its structure and processes have become increasingly complex. Consequently, more decentralized, responsive, and fluid organizational designs are now at the core of IB research. Juxtaposing recent arguments questioning subsidiary research altogether, we argue that IB scholars can explore and explain complex realities in the contemporary MNE without unnecessarily restricting the breadth of the field and giving up links to established research and theory. We reframe conversations around inward- and outward-looking perspectives, providing a path forward that emphasizes the importance of embracing the subsidiary concept in research reflecting today's complex business environment.

Although stakeholder norms originating in developed economies influence firms’ board composition, including board diversity, less is known about firms in emerging economies, specifically India. In this heterogeneous institutional context, firms’ strategic choices are subject to changing institutional forces and complex social structures. Bridging the institutions-based view with the network theory, this study examines Indian MNEs’ strategic choices regarding an important socio-economic diversity, namely board caste diversity. Specifically, we contend that Indian firms’ exposure to stakeholder norms from developed economies would increase their board caste diversity. However, such adaptations can face constraints and opportunities embedded in multiple social structures of India. Analyses of three large Indian datasets between 2010 and 2018 suggest that Indian MNEs’ board caste diversity is indeed driven by their exposures to stakeholder norms from developed economies. Further, such adaptations are strengthened when firms occupy key positions – prominence (centrality) and brokerage – in a network with market-based affiliations (i.e., banks), but are weakened when firms occupy prominence (centrality) and brokerage in a network with tradition-based affiliations (i.e., family and kinship). Our findings imply that managers should be cognizant of interactions between local social structures and international exposure in organizational adaptation toward stakeholder orientation in emerging economies. Managers are also advised to assess the often divergent effects on firms’ learning and adaptations from varying network affiliations.

Ioannou and Serafeim's (J Int Bus Stud 43:1–31, 2012) JIBS Decade Award-winning article outlines the impact of national institutional differences on firm corporate social performance (CSP). We build on their contribution by proposing that to identify how national institutions shape CSP, we need to consider various levels that have an impact on this relationship, i.e., the micro, firm, subnational, and supranational levels. We elaborate on each of these levels to argue that scholars should consider adopting a broader approach to analyzing CSP drivers. We develop potential research opportunities to inspire future scholars to extend our understanding of national institutions and their influence on CSP. These insights also aim to inform the connection between firm behavior and CSP performance.

Concerns have been raised as to the potentially deleterious effects of advertising on society. We examine this issue given the recent calls to explore the societal effects of international business activities, the substantive nature of advertising spending globally, and the movement by governments to hold businesses accountable for societal harms. We build upon the general theory of competitive rationality, suggesting a positive relationship between advertising spending and happiness at the country level. We integrate an institutional economics framework into the general theory of competitive rationality to understand country effects. We explore whether institutional environments (i.e., political, regulatory, and social) are associated with happiness and/or moderate the relationship between advertising spending and happiness. We empirically examine these relationships using a 34-country, 9-year unbalanced panel dataset. Our findings indicate that advertising spending at the country level is positively associated with happiness, even when accounting for country-level institutional direct and moderating effects. We discuss our results in comparison to prior findings, highlighting implications for international marketing theory and practice, and setting forth a foundation for debate and research in the field.

Is there a liability of foreignness in online crowdsourcing contests for creative work? Digitalization mitigates physical orthodox transaction-based frictions and is therefore expected to reduce the liability of foreignness. However, for creative work sourced digitally across borders, due to the decoupling of the locus of creation from the locus of selection and due to the cognitive nature of creative tasks, we suggest that frictions continue to arise from foreign solvers’ cognitive home biases in creative task generation and from solution-seeker firm managers’ cognitive home biases in creative task selection. These biases manifest as LOF, reducing the likelihood of foreign solvers’ work being selected as winners in online crowdsourcing contests. Furthermore, we argue that as foreign solvers gain both breadth and depth of international experience in prior online contests, and observe host peers in a live contest, the effect of the liability of foreignness is reduced due to the conceptual expansion of solvers’ creative consideration sets. Similarly, the seeker firm’s cognitive openness in selection arising from its being in a technology industry or being a physically international firm reduces the liability’s negative effect on solvers’ success. Our conditional logit estimation with multiway fixed-effects using 558,504 contest-solver observations from 13,993 solution-seeker firms in 102 countries and 11,497 solvers in 124 countries on an online platform broadly supports our hypotheses, suggesting that there are both demand-side and supply-side cognitive sources of LOF even in unblind online crowdsourcing contests.

Our work builds on network theory to investigate the role of alliance networks in international acquisition premiums. On the one hand, we postulate that an international acquirer’s network centrality in the target country lowers the inclination of offering higher bid premiums associated with its liability of foreignness (i.e., negatively moderates the relation between foreignness and premiums). On the other hand, we provide a perspective that a target firm’s local network centrality increases an international acquirer’s willingness to pay higher premiums in order to gain access to unique and valuable local knowledge and resources (i.e., positively moderates the relationship between foreignness and premiums). To test our hypotheses, we analyzed a sample of 1693 related acquisition bids made in more than 40 countries between 2008 and 2017. Our findings support our dual perspective on the role of networks and demonstrate that the acquirer's networks and the target's networks have distinct influences on the relationship between foreignness and bid premiums. This study makes contributions to the understanding of the complex dynamics at play in international M&As and emphasizes the importance of distinguishing between the acquirer’s and the target’s networks in shaping acquisition premiums.

We examine the timing and mode of firm exits from host-country conflict zones. We argue that timing and mode are interdependent decisions where decision ordering matters, and show that a firm’s prioritizing of either exit timing or mode is dependent on the relative salience of two behavioral stimuli: (1) the firm’s own experience (i.e., its performance shortfall), and (2) the experience of peer firms (i.e., their exits). Using instrumental variables modeling on a sample of 101 Japanese MNE exits from 11 conflict-afflicted countries between 1991 and 2005, we demonstrate that, when mode is prioritized over timing, partial exits tend to occur earlier and whole exits later. However, when timing is prioritized over mode, the decision choices reverse: earlier exits tend to be whole and later exits partial. The outcome of one decision therefore affects that of the other in a unique and predictable manner, such that the ordering of the decisions both produces and precludes strategic choices. Our findings, based on a multidecision problem that has traditionally been treated as a single decision (i.e., foreign exit), delineate expanded boundary conditions for satisficing, as well as reconcile optimizing and satisficing behaviors.

Digital technologies are changing how businesses strategize and organize internationally. They not only enable cost reduction in businesses crossing national boundaries but also enable novel types of products and business models. Yet, barriers to cross-border businesses persist or even re-emerge, such that the study of international business remains important in the digital age, but may have to shift focus. We argue that businesses operating internationally develop digital business strategies that are interdependent with their internationalization strategies. In doing so, they have to account for differences across national contexts including informal institutions, formal institutions, and resource endowments. We offer a conceptual framework linking external and internal antecedents to digital business and internationalization strategies. We focus in particular on three digital strategies: owning digital platforms, participating in digital platforms, and transforming traditional businesses for the digital world. On this basis, we discuss the contributions of the papers in this special issue and conclude by outlining an agenda for future research.