Managing International Business
Organizations
Introduction
MIBO
• Builds upon existing knowledge
• Previous courses serve as building blocks
• Not to introduce you to new concepts
• Adopt a practical perspective
• Thesis has a research focus
• Give opinions or judgements on MNC actions/decisions,
provide solutions to real life problems
|2
READINGS AND LECTURE VIDEOS
|3
• Readings provide up-to-date research on important IB topics
• Review papers have been selected
• Confirm or extend your existing understanding
• Do not read complete papers, only focus on the state of
existing research, not gaps and future research suggestions
• Mentioned what you should read for each paper
• Lecture Videos provide the purpose of including the reading
and highlight the key message
• Read papers in detail on your own
• Provide solutions to questions on the discussion board
EXAM
|4
• Preparation is already done J
• Essay questions, not multiple-choice questions
• Test ability to make judgements and provide solutions
• No “right” or “wrong” answer, need to justify properly
• Questions will be based on the themes mentioned and the
knowledge gained by doing the course assignments
• Course assignments have been designed to prepare you for
the exam
• Understand how to provide solutions to problems
|5
QUESTIONS
|6
Gradual Internationalization vs. Born-Global/International
New Ventures: A Review and Research Agenda
Figure 1 + read sections 1, 3 and 4
PURPOSE & KEY MESSAGE
• Two dominant internationalization approaches
• Gradual vs. Rapid Internationalization
• Timing of initial expansion and speed of internationalization
• Gradual Internationalization research is rooted in Uppsala
Model
• Relationship between learning and commitment
• Rapid Internationalization research is rooted in research on
born globals and international new ventures
• Prior experience or learning; learning by doing
|7
|8
|9
Examine the
internationalization
approach of Netflix.
Did Netflix pursue gradual or
rapid internationalization?
Also, argue why Netflix
adopted this approach?
| 10
International Market Entry Mode – A Systematic Literature
Review
Skim through Table 1 + read page 601 to page 617
PURPOSE & KEY MESSAGE
• Overview of entry mode research
• Key antecedents and multiple theoretical perspectives
•
Focus primarily on external and internal antecedents
| 11
ANTECEDENTS
| 12
• Higher the cultural distance, higher the likelihood to opt for collaborative
entry modes (e.g., do a joint venture)
• Higher the market attractiveness, higher the likelihood to opt for higher
control (e.g., a wholly owned subsidiary)
• Higher the uncertainty, higher the likelihood to opt for collaborative entry
modes
• Higher the desire to control or monitor the subsidiary, higher the likelihood
to opt for higher control
ANTECEDENTS
| 13
• Higher the international experience in similar markets, higher the
likelihood to opt for higher control
• Higher the desire to safeguard specific assets, higher the likelihood to opt
for higher control
What entry mode would an MNC prefer for a distant subsidiary located in a
highly attractive market in terms of its customer base?
| 14
Provide a solution to the sample essay question
| 15
Changes in foreign operation modes: A review and research
agenda
Table 1 + read sections 1, 2, and 4
PURPOSE & KEY MESSAGE
• Show how MNCs make mode change decisions over time
• Make a distinction from entry mode decisions
• Types of mode changes
• Antecedents of mode change
• Firm and environmental level antecedents
| 16
| 17
| 18
De-Internationalization: A Thematic Review and the
Direction Forward
Figure 2 and 4 + read sections 1 and 3
PURPOSE & KEY MESSAGE
• De-internationalization vs. Internationalization
•
Help with case presentations
• Understand the antecedents, outcomes, and moderators of
de-internationalization
| 19
|
20
| 21
Internal Dynamics:
Ownership
Pace of internationalization
HQ-subsidiary differences
Subsidiary performance
|
22
If you are hired as a consultant for your assigned
companies, would you advise them to re-enter the
markets they have de-internationalized from? Also,
provide a justification for your response?
|
23
Decades of Research on Foreign Subsidiary Divestment:
What do we Really Know about its antecedents?
Figure 1, Table 1 + sections 1, 2, and 5
PURPOSE & KEY MESSAGE
• Findings apply to de-internationalization broadly
•
Help with case presentations
• Antecedents of de-internationalization
• Superior understanding of antecedents in relation to reading # 4
• Host country experience increases the likelihood of
divestment (or de-internationalization)
|
24
|
25
|
26
Which factors outlined
here are significant and
relevant to your
assigned case?
| 27
The Concept of Distance in International Business
Research: A Review and Research Agenda
Read from page 160 to page 170
PURPOSE & KEY MESSAGE
• Overview of distance research
• Negative perspective on distance
• Drawbacks and benefits of distance
• Drawbacks: costs, complexity, uncertainty
• Benefit: better decision-making (psychic distance paradox)
• Impact on key MNC decisions
• Skewed focus on cultural distance
|
28
IMPACT OF DISTANCE
|
29
Higher the distance:
•
•
•
•
Lower the FDI
Lower the market attractiveness
Lower the resource commitment or ownership
Lower the knowledge transfer or willingness to transfer
knowledge
• Lower the ability of HQ to make sense of the knowledge
• Lower the ability of the HQ to monitor or control the activities
of the subsidiary
• Lower the subsidiary performance
|
30
Does distance really lead to better decision making?
Can you think of examples or situations where multinational
companies have not made better decisions when entering
distant markets?
| 31
Foreignness Research in International Business: Major
Streams and Future Directions
Figure 1 + read entire paper, excluding review process and overall
framework, avenues for future research, and conclusion
PURPOSE & KEY MESSAGE
• Overview of research done on foreignness
• Takes a more a positive perspective on distance in relation to
reading #6
• Drivers and responses to overcome LoF
•
Gaining legitimacy (fit in) or be unique (stand out)
• Presents assets of foreignness as a contrary notion to LoF
|
32
|
33
|
34
Can you think of specific actual examples where
multinational companies have used their foreignness to
gain benefits (i.e., assets of foreignness)?
| 35
What Do We Know About Corporate Headquarters? A
Review, Integration, and Research Agenda
Figure 1 + read page 1 to page 23
PURPOSE & KEY MESSAGE
|
36
• Show how the size, role, and importance of the corporate HQ
varies across firms
• CHQ has three main roles: administrative, loss preventive,
and entrepreneurial
• Corporate strategy is the key determinant
Unilever and Shell have recently
decided to base their headquarters in
UK only; previously they had their
headquarters based in both
Netherlands and UK.
What are the benefits and costs of
having multiple corporate
headquarters?
Do you agree with their decision to
base the corporate headquarters in
UK, not the Netherlands?
| 37
|
38
Managing the MNE Subsidiary: Advancing a multi-level and
dynamic research agenda
Table 1 and Figure 2 + sections 1, 2, 4, and 5
PURPOSE & KEY MESSAGE
• How should MNCs manage its subsidiaries?
• Different roles and functions of subsidiaries
• Subsidiaries are taking on advanced roles in MNCs; making
it challenging to manage subsidiaries
|
39
|
40
| 41
|
42
Many Dutch companies use home country nationals as
expatriates in distant subsidiaries, like China and
Brazil. They are given top positions in the subsidiary,
such as country manager or president.
What are the pros and cons of this policy?
|
43
The multinationality and performance relationship: Revisiting
the literature and exploring the implications
Read sections 1 and 3, also skim through Table A1.
PURPOSE & KEY MESSAGE
|
44
• Are multinational companies always successful?
• Do multinational companies hold an advantage over domestic
companies?
• Research on multinationality and performance has produced
mixed results
• Performance of MNCs is linked with FSAs, not
multinationality
•
Exploit existing FSAs and develop new FSAs in foreign markets
|
45
Nguyen, 2017
|
46
Wants to open a second
shop after amazing
success in Groningen. He
is thinking of Hamburg as
an option.
What do you recommend
him: stay in Groningen
only or open a shop in
Hamburg?
| 47
Nurturing International Business research through Global
Value Chain literature: A review and discussion of future
research opportunities
Table 5 + read sections 1 and 3
PURPOSE & KEY MESSAGE
• Provide a supply chain or global value chain perspective
• Role of location advantages and institutions
• Discussion of the notion of governance and upgrading
|
48
|
49
|
50
We can observe upgrading at the country level in Bangladesh.
How have they made it possible? Why is upgrading not
happening at the firm level, as there are no textile brands
from Bangladesh?
| 51
Performance Consequences of Marketing
Standardization/Adaptation: A Systematic Literature Review
and Future Research Agenda
Read section 1, 3, 4, 5, and 6.1
PURPOSE & KEY MESSAGE
|
52
• No approach is superior – standardization or adaptation
• Adopt a balanced marketing strategy that fits with the external
environment and reflects the internal resources of the firm
• Adaptation is more common among B2C firms, while
standardization is more common among B2B firms
• Product adaptation positively relates with firm performance,
but for other aspects, standardization has a positive
relationship
| 53
Which marketing strategy do
they adopt, primarily in
terms of its products?
Argue why do they adopt this
strategy?
How do you think McDonalds
finds a balance between
selling products that reflect
the company’s resources
and identity, but also
enables the company to find
a strategic fit with the
multiple cultural
environments in which they
operate?
|
54
| 55
The social responsibility of international business: From
ethics and the environment to CSR and sustainable
development
Read the entire paper
PURPOSE & KEY MESSAGE
|
56
• Social responsibility domain of a multinational company
• Combination of environmental, ethical, and social dimensions of
MNC activities
• Highlights the multiple environmental, ethical, and social
challenges and issues confronting multinational companies
• Transition of the social responsibility domain over time
•
Pollution control to corporate activism
| 57
|
58
Use Ben & Jerry as the case
study to discuss the costs
and benefits associated with
corporate activism?
|
59
Navigating cross-border institutional complexity: A review
and assessment of multinational non-market strategy
research
Read sections 1 and 5
PURPOSE & KEY MESSAGE
|
60
• Outline the non-market activities of multinational companies
• Non-market strategy: actively manage the institutional and/or
societal context
• Purpose: gaining legitimacy, risk reduction; ultimately to
maintain competitive advantage and profitability
• Integrate CPA and CSR activities
Non-market Strategies
• Corporate Political Activity
• Coopetition between MNCs and host governments
• Intensity of political ties
• Political capabilities
• Who makes the decisions?
• HQ or subsidiary
• Corporate Social Responsibility
• CSR and sustainability reporting
• Human rights and sustainability issues in supply chains
• Citizenship and Philanthropy
| 61
|
62
What is the purpose of
sustainability reports?
What information do companies
include in them?
MTN was accused of giving protection |
money to the Taliban in Afghanistan to 63
secure its infrastructure between 2009
and 2017.
Taliban had complete control of certain
parts of the country and the formal
Afghan government had no writ in
those areas.
If you were working as an expatriate in
Afghanistan, how would you have dealt
with this problem?
|
64
Heuristics in International Business: A Systematic Literature
Review and Directions for Future Research
Read sections 1, 2, and 5, also skim through Table 3
PURPOSE & KEY MESSAGE
|
65
• Is decision making always rational?
• Heuristics: decision rules, procedures, or rules of thumb that
simplify decision making
• Decision makers are faced with bounded rationality issues
• Biased or prone to error vs. fast and frugal
• Use of heuristics is prevalent in the IB context
•
Imitative behavior, availability heuristic, and anchoring heuristic
|
66
Why is franchising so
prevalent among fast food
chains, like McDonalds,
Subway, KFC, and Burger
King?
Is it the most effective entry
mode strategy in foreign
markets for fast food
chains?
| 67
Mapping Moral Philosophies: Strategic Implications for
Multinational Firms
Figure 1 + read page 385 to page 390 (till proposition 5)
PURPOSE & KEY MESSAGE
• Ethical dimensions in decision-making
• Convergence vs. Divergence
• This paper focuses on the divergence perspective
• Discusses how ethical standards vary across cultures
|
68
|
69
|
70
What explains this reaction
from PepsiCo?
How would you have reacted
if you worked at PepsiCo?
| 71
Is it “wrong” to bribe
politicians in Iceland,
but “right” to do this in
Namibia?
| 72
Platform Without Borders? The International Strategies of
Digital Platform Firms
Table 1 and Figure 1 + read entire paper, except for sections 5 and 6
PURPOSE & KEY MESSAGE
• Understand the international expansion of digital platform
firms
• FSA = users on the platform
• Importance of network externalities
• Direct and indirect
• Within-country and cross-country
• Nature of network externalities has an impact on the
internationalization strategies
| 73
| 74
| 75
| 76
Bol.com only operates in
Netherlands and Belgium.
Should it pursue further
global expansion? If no, what
are the challenges in your
view? If yes, how should it
proceed with the global
expansion (which countries
and entry mode choices)?
| 77
Family Firm Internationalization: Past Research and Agenda
for the Future
Table 1 and Table 2 (skim through only) + sections 1, 3, and 4
PURPOSE & KEY MESSAGE
• Distinction between family firms and non-family firms
• Longer time horizon, financial + non-financial goals
• All family firms are not risk averse or careful in decision
making
• Balance financial goals with non-financial goals (SEW)
• Family firms differ in their approach to internationalization
• No consensus in existing research
|
78
SOCIOEMOTIONAL WEALTH
| 79
• Non-financial goals, such as preserving family identity,
ability to exercise family influence, and perpetuation of
family dynasty
• Higher the focus on SEW in comparison to financial
aspects, the more risk averse a family firm will become
• Higher the focus on financial aspects in comparison to SEW,
the more risk taking a family firm will become
|
80
Examine the global expansion
patterns of Heineken.
What key lessons can be
learnt from Heineken as a
global company, primarily in
terms of maintaining a
succesful family business
over four generations?
| 81
Revisiting emerging market multinational enterprise views:
The Goldilocks story restated
Read entire paper
PURPOSE & KEY MESSAGE
• Have we overestimated the capabilities and potential of
emerging market multinationals
• New theories are not required to understand the actions of
emerging market multinationals (goldilocks story)
• No evidence to support springboard perspective
• Not appropriate to treat all emerging markets as being
completely identical
|
82
ESTABLISHED UNDERSTANDING
• Home markets of emerging market multinationals are
characterized by institutional vulnerabilities and market
constraints
• Dependent on strategic assets of multinationals based in
advanced markets
• Pursuing strategic asset seeking investments to become global
leaders
Can they easily identify and assimilate these strategic assets?
|
83
REVISIT OUR UNDERSTANDING?
|
84
• Home markets of emerging market multinational vary
considerably from each other; do not have institutional voids
• Combine market seeking investments with strategic asset
seeking investments
• Actively investing in Africa
• Not solely dependent on strategic assets possessed by
multinationals in advanced markets
• Do not want to become global leaders
|
85
Geely acquired Volvo Cars in 2010.
It was hailed as a move that will
lead to Geely becoming a world
leader in the automotive industry.
How has Geely gained from the
acquisition of Volvo? How has Volvo
gained from the acquisition by
Geely? How has Geely pursued
global expansion following the
acquisition in 2010?
|
86
Governments as Owners: State-owned Multinational
Companies
Table 3 + read 919 to page 936
PURPOSE & KEY MESSAGE
|
87
• Explain the global expansion of state-owned companies
• Mechanism for providing social welfare to citizens to
serving as vehicles for political diplomacy
• State-owned multinationals need to manage financial goals
with political ambitions of the home government
• State ownership provides access to resources, but can
also be a source of hostility in foreign markets
•
Need legitimacy building initiatives
|
88
|
89
Indian Oil, a state-owned
multinational company, has
subsidiaries in Mauritius, Sri Lanka,
and United Arab Emirates.
Can you explain the motivation
behind the choice of entering these
foriegn markets?
|
90
Are there any Dutch state-owned
multinational companies?
Why so few (or no) Dutch state-owned
multinational companies?