Knowledge that Transforms

Family-controlled firms (FCFs)’ prevalence, strategies, and performance differ across countries. We explain these differences through the lens of informal institutions, suggesting that different countries have different levels of appreciation for family business. To capture this effect, we introduce the construct of family business legitimacy (FBL) and an associated index (FBLI). We empirically measure FBLI scores for 83 countries spanning both developed and emerging economies. By combining meta-analytic and archival data, we show that FCFs prevail, follow unique strategies, and outperform non-FCFs in countries with high FBLI scores. As a new contingency variable, FBL advances the literature on the informal institutional embeddedness of organizations and family business.

The growing platform economy has revived the debate on the applicability of internalization theory in contemporary contexts. In moving this debate forward, we draw on insights from hybrids research and property rights theory to complement the internalization school. Our core contribution lies in a reconceptualization of platforms as a hybrid organizational form enabling the exchange of property rights between platform owners and complementors. Using social platforms as an example, we propose that improvement in a host country’s intellectual property protection will increase the multinational platform’s (MNP) level of internalization, and that the platform firm’s governance capabilities may weaken the effect of institutions on its operation mode. Our theoretical analysis yields new insights beyond the received view of internationalization that builds on the assumption of internalized proprietary resources. We conclude that internalization theory, as an overarching paradigm in IB, remains adaptable to new organizational forms in the digital economy.

We systematically review the literature on customer satisfaction, partitioning the literature into three generations of thought and focus, with the most recent, third generation, heavily emphasizing international business phenomena. Following a brief, stage-setting review of the first two generations – which address, respectively, the psychological underpinnings of the satisfaction concept, its antecedents, and consequences (first-generation), and the relationship between customer satisfaction, its strategic firm drivers, and firm financial performance outcomes, as well as moderators and mediators of those drivers and outcomes (second-generation) – we primarily focus on the third-generation international studies that have emerged over approximately the last 20 years. These third-generation studies have predominantly investigated the customer satisfaction concept as it is applied cross- and multi-nationally in diverse international market contexts but, due in large part to the cross-disciplinary nature of this research, this literature is fragmented and disjointed. Following a review and synthesis of the third-generation satisfaction literature, connecting it to and differentiating it from the first two generations and integrating its main themes and most significant findings, we identify enduring gaps and unanswered research questions. Of particular note is the dearth of studies examining cross- and multinational moderators of both the strategic firm drivers of satisfaction and the satisfaction–firm performance relationship. We conclude with avenues for future research that can generate important IB-related customer satisfaction knowledge with the potential to provide enormous value to international researchers and managers.

We agree with Aguinis and Gabriel that, contrary to Eden and Nielsen, international business (IB) is not uniquely complex, but argue that it faces two unique challenges. First, because it deals with cross-country phenomena, IB data are less plentiful and reliable. Second, because IB uses many imported theories, and they tend to be influenced by the national environment of their authors, they often have, taken as is, limited applicability in many of the contexts IB studies. We illustrate our twin points by examining the secondary data used in IB to measure the economic activities of multinational enterprises outside their home country, both at the country level, using foreign direct investment (FDI) data from balance of payments statistics, and at the firm level, using firm-level databases such as Orbis. We document the serious shortcomings of FDI data and the problems encountered in using firm-level data. We then highlight some of the cultural biases inherent in Williamson’s version of transaction cost theory (TCT) but show how they can be overcome to arrive at a richer and more general theory that is applicable to a wider variety of contexts.

Opening a field to a diversity of methods takes maturity of the field, a supportive infrastructure, and time. Now, in the wake of our 50th anniversary, we can say the IB field has reached a certain amount of maturity. In this commentary, I provide the backstory to this year’s big win for qualitative methods – the 2021 Decade Award – and discuss how there has never been a better time for the power of richness from case studies, ethnographies, and a wide range of other types of qualitative research to surface and contribute meaningfully to IB theory.

This study investigates how the institutional complexity of a multinational corporation (MNC) impacts its accounting quality. Toward that end, we employ a unique sample of MNCs registering subsidiaries in offshore financial centers (OFCs). Our focus is the tension between external governance mechanisms (i.e., US cross-listing, home-country institutional context) and internal governance mechanisms (OFC subsidiaries). Consistent with the corporate governance bonding hypothesis, we show that cross-listed MNCs exhibit higher accounting quality compared to non-cross-listed MNCs. However, the positive association between cross-listing and accounting quality is negatively moderated by an MNC’s choice of OFC subsidiaries, thereby suggesting that the internal governance mechanisms of MNCs interact with external mechanisms to impact its accounting quality. Moreover, an MNC’s OFC choice negatively moderates the relationship between home-country governance and accounting quality, thus lending further support to corporate governance arbitrage hypothesis. Our study underscores, to regulators and investors concerned about opportunistic earnings management, the importance of enhancing monitoring efforts for MNCs with opaque and complex governance that exhibits international mobility.

Articles in Journal of International Business Studies (JIBS) and elsewhere have argued that international business (IB) is a uniquely complex field. We offer an alternative perspective and evidence that IB is not so uniquely complex compared to organizational behavior, strategic management studies, and entrepreneurship. We argue that viewing IB as uniquely complex is likely a result of what a vast body of social psychology research has uncovered and labeled false uniqueness bias : the tendency for people to believe that they are unique compared to others. We discuss selective accessibility and focalism as underlying psychological mechanisms of this bias. We acknowledge advantages of claiming uniqueness, but argue that it is now more beneficial and realistic to highlight similarities. Doing so will allow IB to import and export theories and methods and thereby make IB borders even more permeable. In turn, increased permeability is likely to lead to further theoretical progress that will benefit IB research, practice, and its positive impact on organizations and society even further. To illustrate advantages of not exaggerating IB’s uniqueness, we use JIBS Decade Award winners as exemplars of studies that are admired and impactful precisely because of their focus on similarities rather than unique complexity.

The COVID-19 pandemic has led to economic and health crises (“twin crises”) worldwide. Using a sample of firms from 73 countries over the period January to December 2020, we examine stock price reactions of multinational corporations (MNCs) and purely domestic companies (DCs) to the crisis. We find that, on average, MNCs suffer a significantly larger decline in firm value relative to DCs during the stock market crisis caused by the pandemic with notable heterogeneity in this underperformance across both industry and region. The evidence of MNC underperformance is robust to using abnormal returns, an alternative crisis window, a matched sample that accounts for differences in characteristics between MNCs and DCs, alternative model specifications, and alternative proxies for multinationality. Further analysis on the effect of government responses on the valuation gap suggests that stringent government responses exacerbate MNCs’ underperformance. Finally, we show that a stronger financial system mitigates negative crisis returns, especially under stringent government responses, while real factors, such as the firm’s supply chain, investments in human capital, research and development, exacerbate negative crisis returns. Our findings have important implications for managers of MNCs and government policymakers alike and contribute to studies on the international diversification–performance relation by demonstrating a dark side of globalization during a tail-risk event.

We develop the construct of global dynamic managerial capability (GDMC) and identify its underlying sources: (1) international human capital, (2) international social capital, and (3) international managerial cognitions. Consistent with dynamic capabilities view and upper echelons theory, we suggest that GDMC leads to global asset orchestration, which in turn, results in superior company performance in a two-stage process. First, GDMC leads companies to adopt global strategies that spread the risk of internationalizations across different entry modes and geographic regions. Second, the (re)configuration of global assets positively influences subsequent firm performance and thus mediates the relationship between GDMC and performance. Recognizing the triad of factors that form global dynamic managerial capability is crucial when selecting future managers of multinational corporations. Hence, firms with increasing international exposure – both domestically via foreign competition and internationally via foreign market presence – may seek to compose their upper echelons with a suitable combination of international human and social capital as well as internationally diverse cognitions in the pursuit of sustained competitive advantage.

The last two decades have witnessed a growing trend of traditional onshore banks establishing affiliates and subsidiaries offshore, along with increased globalization and competition in international financial markets. We examine whether subsidiary operations in offshore financial centers (OFCs) facilitate bank risk-taking. We construct an international sample of banks with and without OFC operations during 2001–2018 and employ various proxies for bank risk-taking. Our results reveal that banks with OFC operations take more risks than banks without OFC operations. Focusing on banks with OFC operations, we find that those with more intensive operations in OFCs exhibit higher risk. Our results also indicate that more intensive operations in OFCs with more regulatory arbitrage opportunities are associated with higher bank risk, and that restrictive bank capital regulations in home countries foster banks’ risk-taking via OFC operations. Our findings are consistent with the view that onshore banks exploit OFCs’ loose regulations, poor transparency, and lack of oversight to pursue riskier activities. These findings have important implications for the international business literature and provide regulators around the world with useful insights into overseeing bank operations in OFCs.