Investment and Control Decisions in Foreign Markets: Evidence from Service Industries
We empirically investigate the entry mode choice in the service sector. In contrast to current models, we propose a model for choice of entry mode that breaks down the decision into two levels of analysis: first, at the more macro level, the choice of the degree of commitment is influenced mainly by country-related variables; second, at the more micro level, the choice of the degree of control is addressed by firm-related variables. Based on a sample of 328 foreign market entries, our study contributes to the literature of entry mode in two ways: first, by showing the explanatory capacity of the hierarchical model in the analysis of entry mode choice in the service sector; and second, throu…
Fine slicing of the value chain and offshoring of essential activities: empirical evidence from European multinationals
The offshoring of more advanced activities is increasing and a debate about the limits of offshoring has emerged. Companies are fine-slicing their value chains, and moving beyond the offshoring of peripheral and non-core activities to the offshoring of advanced and essential activities that are closer to their core (e.g. research, design and product development). The challenge is to understand the limits of offshoring and the most appropriate modes of offshoring. The purpose of this paper is to analyze what activities are offshorable and how best to govern offshored activities. We argue that companies are redefining their core activities and in this process, some essential activities previo…
La filial trampolín : una innovación organizativa en la internacionalización de la empresa europea en Latinoamérica
Este artículo dota de contenido teórico a los conceptos de país trampolín y filial trampolín. Una realidad en las relaciones España-Latinoamérica que, pese a estar continuamente presente en la agenda política y diplomática, no ha sido analizada desde el punto de vista de la investigación en dirección de empresas. La filial trampolín se configura como una innovación organizativa que permite capitalizar las ventajas del país trampolín en la mejora de la eficiencia de las estrategias de internacionalización de la empresa europea en Latinoamérica.
Co-Parenting: A Model of Value Creation in the Multinational Network
We analyze a novel way to configure and manage multinational networks and propose a model of "co-parenting", characterized by the sharing of parenting roles and distribution of responsibilities between two units. We develop our argument around the notion of the springboard subsidiary, which has an extra-regional geographic mandate of a more strategic nature. Such extra-regional headquarters help parent firms overcome the liability of inter-regional foreignness. Based upon qualitative data, our model revolves around three stages: establishment, consolidation and maturity, each of which reflects distinct roles and knowledge flows among the three actors involved: HQ, springboard subsidiary and…
Strategic Variables that Influence Entry Mode Choice in Service Firms
This work investigates how a firm's international strategy affects choice of entry mode in the service sector. The inherent complexity associated with studying a heterogeneous sector such as services requires researchers to investigate variables that go beyond those drawn from traditional empirical work on the manufacturing sector. The adoption of a broader theoretical perspective and the introduction of these new variables may well provide further evidence of the determinants of service firms’ entry mode choices. On the basis of 174 entry decisions of service firms, this study's results support the necessity of including additional strategic variables that specifically address this complex…
Derrames de la inversión extranjera directa y su efecto en las exportaciones: una aplicación empírica en un país emergente
Este trabajo investiga, por primera vez en el caso colombiano, los efectos indirectos de los derrames de la inversión extranjera directa (IED) sobre las exportaciones de las empresas nacionales. A nivel empírico utilizamos una muestra de conveniencia formada por 32 empresas exportadoras, 14 filiales extranjeras y 18 empresas domésticas, las cuales mantuvieron continuidad en cerca de 60% del valor total de la oferta exportable nacional en el periodo de 2007 a 2016. Mediante el uso de un panel de datos con efectos fijos, demostramos que los efectos positivos de la entrada de IED sobre la exportación de las empresas locales se asocian más con mecanismos de reacción para la protección de sus me…
Augmenting versus exploiting entry modes in soft services
Purpose – The purpose of this paper is to address foreign market entry mode as a way to enhance firm’s knowledge base, providing new insights into traditional explanations of entry mode choice for soft services. The authors offer an alternative knowledge-based approach to assess foreign investment decisions by considering the role of resource-augmenting (direct investment) and resource-exploiting strategies (licenses). In addition, the authors untie the type of experiential knowledge, i.e., host country and mode experience, to analyze its interactions with environmental uncertainties such as cultural distance. Design/methodology/approach – Based on a customized database of the Spanish Glob…
Service characteristics as moderators of the entry mode choice: empirical evidence in the hotel industry
Although a considerable amount of research has explored the entry mode choice, results regarding the direct influence of some variables on the entry mode choice evince a lack of a clear consistency. By introducing the moderator effect of the nature of the services being provided by the firm, we explain some of these inconclusive results. We use a comprehensive database on the Spanish hotel industry which covers nearly all the operations carried out by the majority of Spanish hotel chains up to 2011. We found that both intangibility and complexity of the services offered by the hotel moderate the relationship between environmental uncertainties and entry mode choice by increasing the propens…
Internationalization of service industry firms: understanding distinctive characteristics
Internationalization process and strategies has been a popular topic among international business researchers for some time. However, most of these studies deal with manufacturing firms and researc...
A microeconometric analysis of the springboard subsidiary: The case of Spanish firms
Abstract This paper provides a microeconometric analysis of the distinctive characteristics of springboard subsidiaries that have a positive impact on the subsidiaries’ performance. Based on panel data estimations for subsidiaries of European multinational companies with a presence in Spain, the authors found that if the subsidiary is located in the springboard country, then the performance improvement (increase in profit margin) of the subsidiary is about 49 percentage points. When the Spanish subsidiary is considered a springboard subsidiary, its performance is 7.7 percentage points higher than the performance of other subsidiaries that are not springboard subsidiaries. If the subsidiary …
Intermediate units in multinational corporations: A resource dependency view on coordinative versus entrepreneurial roles
Abstract Due to the dispersion of headquarters’ activities across organizational and geographical boundaries, intermediate units (IUs) are emerging as a key actor of international business. IUs are intermediate structural layers between headquarters (HQ) and local subsidiaries with specific HQ responsibilities. Our study relies on original data of 67 IUs and, taking on a Resource Dependence approach, explores empirically the two HQ roles attributed to IUs: coordinative versus entrepreneurial. According to our results, the main differences between both roles relate to external network embeddedness, internal network position and autonomy. We argue that these differences arise from the dominan…
The choice of offshoring operation mode: A behavioural perspective
Since offshoring has recently become an integral part of corporate strategies, choosing the specific offshoring operation mode is a crucial aspect for CEOs. Using a sample of 466 offshoring operations, this study analyses offshoring mode decisions from the rationale of the Theory of Planned Behaviour (TPB). Drawing on this perspective, our results indicate that this decision seems to be clearly influenced by the manager's intentions and partially determined by some competences originated in the resources and experience of the firm. Additionally, and contrary to the common view in the field, our findings suggest that instead of being a possible intermediate option between the “make or buy” d…
Intermediate Units in Multinational Corporations: Advancing Theory on their Co‐parenting Role, Dynamics and Outcomes
Organisational learning capability, product innovation performance and export intensity
The hypothesis that managerial characteristics which facilitate the organisational learning process can provide firms with a basis for competitive advantage has received a great deal of attention. While there is evidence that organisational learning affects export intensity, we argue that intermediate variables, such as innovation, should be used in order to evaluate its impact in organisations. This study shows that firms with a higher organisational learning capability tend to be more innovative, and for this reason, they are more likely to export a higher share of their production. From a longitudinal perspective, we use structural equation modeling on a database from Italian and Spanish…
Governance of global value chains after the Covid-19 pandemic: A new wave of regionalization?
The disruption of the trade and investment activities of multinational enterprises as a consequence of the Covid-19 pandemic has reinvigorated the debate on the configuration of global value chains (GVCs) as well as the risks and challenges associated with offshoring. This article depicts how the pandemic might affect GVC configuration by driving a trend toward a more regional footprint in industries in which resilience and reliability are critical. Such a shift would create new opportunities for reshoring, and affect both the types of upgrading trajectories and the governance systems in value chains. The article also draws from the intersection of the global-strategy and value-chain field…
Unravelling the moderating effects of size and experience on product innovations and exports: a study in a medium knowledge-intensive industry
This paper contributes to improve our knowledge on the important role of product innovation in export strategy by introducing the moderating effects of organizational variables. We argue that in a medium knowledge-intensive industry, these variables might strengthen the relationship between innovations and exports. Research on innovation and export strategy has addressed these issues increasingly during last decades; however, the divergence on the empirical approaches difficult the understanding of the linkages among variables, which are highly dependent on the industry technological characteristics. We carry out a time-lagged study using the literature-based innovation output (LBIO) method…
Productivity, Profitability and Employment: Exploring the Different Effects of the Offshoring Mode
La implementacion de distintas modalidades de offshoring viene siendo una practica habitual en las empresas multinacionales europeas, sin embargo, poco se conoce sobre los efectos que el uso de estas estrategias ejerce en los resultados, uno de los aspectos de mayor interes para las empresas. En este sentido, a partir de una muestra de 156 empresas multinacionales europeas del sector manufacturero, se analizan las diferencias derivadas de la eleccion del modo de offshoring en la productividad y la rentabilidad de las empresas. Adicionalmente, el trabajo examina la influencia que el uso de esta estrategia ejerce sobre el empleo, uno de los efectos que mas inquietud despierta en el entorno ec…
Accelerated internationalisation: evidence from a late investor country
PurposeRecent studies are trying to adapt the explanation of the internationalisation process to new environmental conditions. This paper aims to offer evidence of the existence of a group of firms that use a speeded‐up internationalisation process.Design/methodology/approachCluster analysis and logit regressions are used on a sample of 271 Spanish export firms.FindingsThe results obtained support the claim that substantial differences do exist between fast and gradual internationalising firms. The firms included in the more international active group are characterised by: a proactive attitude on the part of managers with regard to internationalisation activities, a strategy based on market…
Entry mode choice in the internationalisation of the hotel industry: a holistic approach
This paper empirically investigates the entry mode choice in the hotel industry. Based on more than 1200 entry decisions, which covers practically all operations carried out by the majority of Spanish hotel chains up to 2009, the study attempts to (a) identify the factors that influence the mode choice of incorporating each new hotel within the chain and (b) to reflect the specific nature of the hotel industry with regard to the results obtained from samples of other industries. The results suggest the importance of considering a holistic approach that facilitates the understanding of a complex phenomenon which is not always explained just by efficiency considerations. Additionally, the res…
Differential Effects of Bilateral Norms on SMEs’ Export Relationships: A Dynamic Perspective
Prior research has established the pivotal role of bilateral norms in relationship marketing, identifying them as effective relational governance mechanisms that firms can use to manage their international alliances with overseas intermediaries. Unfortunately, few studies have examined differential effects of specific norms on positive and negative behaviors, let alone norms’ effectiveness in the harsh export context of resource-constrained small and medium-sized enterprises (SMEs). To address these gaps, the authors explicate the effects of three norms (continuity expectations, equity, and cooperation) on both dysfunctional and productive behaviors of foreign distributors. Using two conse…
Learning from foreign operation modes: The virtuous path for innovation
In this article, we analyze the impact of learning from internationalization on small and medium enterprises’ (SMEs) performance along different development paths. Drawing on the exploitation versus exploration logic, we use an alternative view of foreign operation modes (the learning perspective) to provide insights into the impact of such learning on technological and organizational innovation as well as overall performance. Our results, which are derived from a sample of 132 SMEs active in traditional manufacturing industries, point to a path to superior performance that entails resource-augmenting operation modes and organizational innovation. JEL CLASSIFICATION: O31; F23; L25; M10; M1…
La filial trampolín: una innovación organizativa en la internacionalización de la empresa europea en Latinoamérica
Este artículo dota de contenido teórico a los conceptos de país trampolín y filial trampolín. Una realidad en las relaciones España-Latinoamérica que, pese a estar continuamente presente en la agenda política y diplomática, no ha sido analizada desde el punto de vista de la investigación en dirección de empresas. La filial trampolín se configura como una innovación organizativa que permite capitalizar las ventajas del país trampolín en la mejora de la eficiencia de las estrategias de internacionalización de la empresa europea en Latinoamérica. This article discusses the theoretical contents of the concepts of springboard country and springboard affiliate. This is a fact of relations between…
The Differences in Values Between Managers of the European Founding Countries, the New Members and the Applicant Countries:
Advocates for a social Europe are worried that the accession of ex-Eastern Bloc countries into the European Community would lead European corporations to emphasize a financial orientation rather than a societal orientation. We examined this question in a study of the values orientations of 3,836 managers in 16 countries representing established EU, new EU, and candidate EU country groups. Within-Europe managerial values convergence was found in a relatively high openness to change and low self-enhancement values. However, we found divergent values such that managers in established EU countries were more self-transcendent and less conservative than their counterparts in new EU and candidate …
Springboarding: a new geographical landscape for European foreign investment in Latin America
When are international managers a cost effective solution? The rationale of transaction cost economics applied to staffing decisions in MNCs
Abstract A common claim in the literature of expatriation is the one referring to the high costs of expatriation. In this paper, on the basis of transaction cost economics (TCE), we show how limited this approach is. In particular, we consider a set of costs that, although ignored in traditional expatriation literature, must be accounted for when a MNC is deciding on whether to recruit expatriates or local managers in its subsidiaries. These costs include selection, training, and performance evaluation costs. We also formulate a series of hypotheses around the situations in which the total costs of recruiting expatriates are lower than those generated by local managers. We then test these h…
A multidimensional concept of uncertainty and its influence on the entry mode choice: An empirical analysis in the service sector
Abstract To date there is limited empirical evidence as to how the nature of uncertainty determines the mode of entry into international markets. The aim of this work is to further analyse this relationship by presenting a multidimensional concept of uncertainty within the context of the service sector. Given the complexity and heterogeneity of this sector, we propose that uncertainty influences the choice of entry mode, but that the choice patterns may be different according to the type of service. From a sample of 328 decisions of entry into international markets, this study identifies differences in entry mode choice patterns between capital intensive service firms and knowledge intensiv…
A transaction cost analysis of staffing decisions in international operations
Abstract This paper analyzes staffing decisions in foreign subsidiaries from the perspective of transaction cost theory. We focus on the ex post transaction costs of the employment relation. Specifically, we look at the monitoring, bonding, maladaptation, and bargaining costs of conducting activities in specific subsidiaries in a foreign country. We hypothesize that the transaction costs of using expatriates are lower than those generated by local employees, especially in the higher managerial echelons of foreign subsidiaries, but also that costs can be reduced as individuals become more experienced. We also conjecture that ex post transaction costs are influenced by cultural differences be…
The internationalization of SMEs: Building models for long-term development
"Springboard Country" and "Springboard Subsidiary": A New Outlook on Internationalization into Latin America
Este articulo dota de contenido teorico a los conceptos de “pais trampolin” y “filial trampolin”. Una realidad en las relaciones Espana-Latinoamerica, que pese a estar continuamente presente en la agenda politica y diplomatica no ha sido analizada desde el punto de vista de la investigacion en direccion de empresas. Una “filial trampolin” sera una filial que convierte las ventajas de localizacion del “pais trampolin” en una autentica ventaja especifica de la filial. Para ello, debe desarrollar conocimiento experimental relevante (tacito y especifico), especializado, y lo que es mas importante, valorado por la matriz y el resto de las filiales. Ello le permitira reivindicar cierta disposicio…
Analysing the link between export intensity, innovation and firm size in a science-based industry
Abstract The aim of this paper is to contribute to a better understanding of the relationship between export intensity, innovation and size in a particular technological setting: a science-based industry. Using a sample of 121 firms in the French biotechnology industry, we have found that firm size is not a determinant for innovation or for export intensity. However, the results show a positive and significant link between innovation and export intensity. Our findings open a new agenda for policy-makers when interpreting how they should promote innovation and exports in science-based firms.
Co‐parenting through subsidiaries: A model of value creation in the multinational firm
Research summary We analyze a novel way to configure and manage multinational networks and propose a model of "co-parenting", characterized by the sharing of parenting roles and distribution of responsibilities between two units. We develop our argument around the notion of the springboard subsidiary, an operating subsidiary which assumes headquarters’ functions since it shares greater institutional closeness with both the headquarters’ country as well as with the host region. Based upon qualitative data, our inductive model revolves around three stages: establishment, consolidation and maturity, each of which reflects distinct roles and loci of decision making among the three actors involv…
La influencia de las características y percepciones directivas en los nuevos modelos de internacionalización
En las economías desarrolladas y con el actual escenario competitivo, las pymes de los sectores industriales maduros están sometidas a una serie de fuerzas económicas que limitan su capacidad para subsistir. Factores como el endurecimiento de la competencia proveniente de los grandes productores asiáticos (China, India, Pakistán) y de los países de Europa del Este, el incremento espectacular del poder de negociación de los distribuidores o la desaparición del canal minorista y de los mercados referenciados en dólares (Camisón, 2001, Pla-Barber, et. al, 2007) han generado una alarmante disminución de empresas y empleos en estos sectores. Frente a este panorama poco alentador, existen solucio…
Exploring the role of knowledge management practices on exports: A dynamic capabilities view
Abstract Drawing on dynamic capabilities view, this work provides empirical evidence on the role of knowledge management practices on export intensity in SMEs in a mature and global, non-high-tech industry. A quantitative study with structural equation modeling was carried out on a sample of 157 Spanish and Italian manufacturing companies in the ceramic tile industry. Our results suggest the existence of a mediating effect of dynamic capabilities on exports, hence the implementation of knowledge management practices is a necessary but not sufficient condition to improve exporting, requiring the existence of dynamic capabilities to reconfigure these capabilities. Findings highlight the relev…
Socioemotional wealth in family business research: A systematic literature review on its definition, roles and dimensions
This study aims to depict the current state of research on socioemotional wealth (SEW) in family businesses considering its definitions, roles, and dimensions. Using the SPAR-4-SLR protocol (Paul, Lim, O’Cass, Hao, & Bresciani, 2021), we develop a systematic review of literature on SEW covering 74 studies published between 2007 and 2022. We propose a comprehensive definition of SEW based on four nonfinancial aspects and an association model that reviews the roles of SEW as an antecedent, a consequence, or a moderator. We also offer a new conceptual model for SEW comprising a general dimension and ten specific dimensions to facilitate empirical inquiries into areas beyond those considered by…
Configurational theory in traditional manufacturing industries: a new model of high-performing small and medium-sized enterprises
The goal of this study is to provide a model of high-performing small and medium-sized companies to address the new environmental challenges in traditional manufacturing industries. Adopting a configurational logic and following an inductive approach based on four high-performing firms, this paper provides new empirical evidence on how the steps followed by these firms are adjusted to the high-performance models prescribed by the literature. In doing so, it also offers a dynamic view of the interrelationships between the strategy and the new conditions of the environment. At a practitioner level, the paper illustrates which recipes are more appropriate to prescribe recommendations for a mor…
Is the influence of the industrial district on international activities being eroded by globalization?
Abstract This study provides insight into the impact of industrial districts on the international activities of firms, in the particular context of one traditional manufacturing industry: the Spanish home-textile industry. Using a sample of 128 manufacturing firms, the paper shows how location influences the timing and levels of exports and imports. Moreover, our results demonstrate how these influences have been diluted in recent years as the home-textile industry becomes more involved in the global arena. Our findings challenge some key arguments exploring the advantages of the district in the international activities of firms; in particular, first, in questioning the capacity of the dist…
The internalisation of foreign distribution and production activities
Abstract This paper, using a logit model applied to a sample of 323 Spanish companies with international activities, analyses the key factors in the creation of sales and production subsidiaries. A high degree of fit between the results and the established hypotheses can be observed. Many interesting findings related to the main streams of entry mode research (Transaction Cost Theory and the Uppsala Model) have been supported. The intangibility and tacit nature of the products/processes involved in the foreign venture have been directly associated to wholly owned sales and production subsidiaries. Moreover, modes of entry used by Spanish firms are adapted as an incremental, experiential lea…