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International Research and Development and Knowledge Sourcing by Multinational Corporations  

Kazuhiro Asakawa and Jaeyong Song

Internationalization of R&D facilitates knowledge sourcing of multinational corporations (MNCs) on a global scale. As MNCs internationalize R&D, they not only engage in domestic-driven R&D but are actively involved in overseas-driven R&D. And accordingly, the role of overseas R&D laboratories often evolves, from applying the HQ-generated innovation to local market, to innovating locally and contributing to the parent company. Within an MNC boundary, knowledge flows have become multidirectional: on top of the most typical knowledge flows from headquarters (HQ) to a subsidiary, reverse knowledge flows from a subsidiary to HQ as well as horizontal knowledge flows among overseas subsidiaries have become more salient. In addition to knowledge flows within a firm, increasing attention has been paid to external knowledge sourcing, i.e., knowledge sourcing from foreign locations outside the firm. MNCs commonly engage in local knowledge sourcing, i.e., sourcing knowledge from an overseas local environment, to tap into local hotbeds of innovation. But MNCs are also increasingly conducting global knowledge sourcing, i.e., sourcing knowledge from around the world, to practise global open innovation. Theoretically, knowledge sourcing in international R&D has often been examined from the capability and embeddedness perspectives. The effect of capability has been discussed in connection with motivation, autonomy, and mandates of subsidiaries. The effect of embeddedness has been discussed in connection with complementarity between external and internal embeddedness. As future research agenda, the following are suggested. First, cross-fertilization among the research fields of international R&D, global innovation, and open innovation deserves further attention. Second, greater research focus can be placed on managerial processes of global knowledge sourcing. Third, further research can be advanced on global knowledge sourcing at the team level. Fourth, the association between corporate governance and global knowledge sourcing can be investigated further. Fifth, much more attention needs to be paid to microfoundations of global knowledge sourcing. And lastly, further evolving patterns of global knowledge sourcing by advanced country multinationals (AMNCs) and emerging economies multinationals (EMNCs) continue to be relevant.

Article

The Petrostate in Africa  

Omolade Adunbi

Oil exploration in Africa began during the colonial period. The discovery of oil in many African states and its attendant promises of development has been a double-edged sword for the continent. In many African countries, discovery of abundant oil fields coincided with independence, entrusting the management of huge oil reserves to the postcolonial states that emerged from the rubble of colonialism. Oil has made Africa a strategic energy source for the rest of the world. As of 2017, Africa was estimated to contain upward of 126 billion barrels of proven oil reserves, constituting about 10 percent of world reserves. Yet the search for more oil continues in many African countries. Oil generates immense revenue for states that have it but it also makes them susceptible to a boom-and-bust cycle that mono-economies often confront. The finite nature of oil and the technology that is needed to extract it have made oil a beautiful bride for multinational corporations and the state which partners with them. Elite competition is often the norm in states rich in oil, where its control is often accompanied by access to the huge resources, with no benefits accruing to the larger population. The process of elite accumulation of oil rent has preoccupied most scholarship on Africa since the 1970s, when many oil-rich states experienced a boom—hence the notion that such countries on the continent are a petrostate. Petrostates are susceptible to the resource curse of mono-economies, according to the analyses that have dominated the political economy literature for the better part of the last half century.

Article

Global Strategy and Multinational Corporation Capabilities  

Donald R. Lessard and D. Eleanor Westney

Strategy in a global setting involves competition in industries that extend across national boundaries and among firms with different national home bases that may tap into strategic resources in more than one location. The resources that the firm accesses from its home country provide it with international competitive advantage only if they are relevant in other markets, if the value they create is appropriable, and if they are transferable to those markets (RAT), These resources include tangible assets and factors of production, but, importantly, also the capabilities the firm develops. Similarly, the resources that it taps from other contexts provide it with further competitive advantage only if these resources are complementary to the firm’s existing resources, appropriable, and transferable to the locations where it can exploit them (CAT). These two sets of factors—RAT and CAT—provide a framework for international strategic decisions that emphasizes developing, acquiring, and transferring capabilities.

Article

International Negotiation in a Foreign Policy Context  

Michael J. Butler and Mark A. Boyer

Negotiation has emerged as the foreign policy tool of choice within the broader context of “complex interdependence,” whether the issue is about human rights, economic development, and scientific, cultural, and educational exchanges, or organized crime, migration, disease, and pollution. The expanding role of international negotiation has been magnified by changes in the international system, including the emergence of issue-specific negotiation “subsystems,” regionalism, and international regimes. In addition to sovereign states, other actors involved in international negotiation and diplomacy include international governmental organizations/regional governmental organizations, nongovernmental organizations, multinational corporations, regional and substate actors, and even private individuals. A host of factors influence the behavior of these actors, such as cultural variables associated with national identity. Furthermore, both the character and the number of issues at stake in any particular negotiation play a crucial role in shaping the nature and complexity of the negotiation process. Research on diplomacy negotiation encompasses a substantial body of literature that provides a window into the complexity of the interactions that take place among and around diplomats. The intellectual richness of such literature offers a means of understanding the outcomes in the everyday world of diplomatic interactions, while also attesting to the value of pursuing multi-method approaches to social scientific research more generally.

Article

Business Social Responsibility  

Gavin Benke

“Corporate social responsibility” is a term that first began to circulate widely in the late 1960s and early 1970s. Though it may seem to be a straightforward concept, the phrase can imply a range of activities, from minority hiring initiatives and environmentally sound operations, to funding local nonprofits and cultural institutions. The idea appeared to have developed amid increasing demands made of corporations by a number of different groups, such as the consumer movement. However, American business managers engaged in many of these practices well before that phrase was coined. As far back as the early 19th century, merchants and business owners envisioned a larger societal role. However, broader political, social, and economic developments, from the rise of Gilded Age corporations to the onset of the Cold War, significantly influenced understandings of business social responsibility. Likewise, different managers and corporations have had different motives for embracing social responsibility initiatives. Some embraced social responsibility rhetoric as a public relations tool. Others saw the concept as a way to prevent government regulation. Still others undertook social responsibility efforts because they fit well with their own socially progressive ethos. Though the terms and understandings of a business’s social responsibilities have shifted over time, the basic idea has been a perennial feature of commercial life in the United States.

Article

Regime Type and Foreign Direct Investment: A Transaction Cost Economics Approach to the Debate  

Austin P. Johnson and Quan Li

A debate exists in international political economy on the relationship between regime type and foreign direct investment (FDI). The central point of contention focuses on whether multinational firms generally prefer to pursue business ventures in more democratic or autocratic countries. A considerable amount of theory has been developed on this topic; however, the arguments in previous studies lack consistency, and researchers have produced mixed empirical findings. A fundamental weakness in this literature is that while FDI has largely been treated conceptually as a homogeneous aggregate, in reality, it features divergent characteristics on multiple dimensions. Three possible dimensions that FDI can be decomposed on are: greenfield vs. brownfield, ownership type (wholly owned vs. joint venture), and horizontal vs. vertical. The most relevant dimensions to the problem at hand are: greenfield vs. brownfield, and horizontal vs. vertical. Five propositions, based on the notion of asset specificity, other investment attributes, and host nation domestic factors, are derived to predict how regime type might affect four types of FDI: vertical-greenfield; vertical-brownfield; horizontal-greenfield; and horizontal-brownfield. Depending on the type of FDI, multinational corporations may have no regime preference, an autocratic preference, or a democratic preference. This research contributes to empirical international relations theory by providing a useful example on how to resolve a scholarly debate, theoretically, and by laying out testable propositions for future empirical research.

Article

Non-State Actors and Foreign Policy  

Frank A. Stengel and Rainer Baumann

The rise of non-state (international, private, and transnational) actors in global politics has far-reaching consequences for foreign policy theory and practice. In order to be able to explain foreign policy in the 21st century, foreign policy research needs to take into account the growing importance of nonstate actorss. A good way to do this would be to engage the literature on globalization and global governance. Both fields would benefit from such an exchange of ideas because their respective strengths could cancel out each other’s weaknesses. Foreign policy research, on the one hand, has a strong track record explaining foreign policy outcomes, using a broad range of theoretical concepts, but almost completely ignores non-state actors. This is highly problematic for at least two reasons: first, foreign policy is increasingly made in international organizations and intergovernmental and transnational governance networks instead of national institutions like foreign ministries. Second, the latter increasingly open up to, and involve, non-state actors in their policymaking procedures. Thus, if foreign policy research wants to avoid becoming marginalized in the future, it needs to take into account this change. However, systemic approaches like neorealism or constructivism have difficulties adapting to the new reality of foreign policy. They stress the importance of states at the expense of non-state actors, which are only of marginal interest to them, as is global governance. Moreover, they also conceptualize states as unitary actors, which forecloses the possibility of examining the involvement of non-state actors in states’ decision-making processes. Agency-based approaches such as foreign policy analysis (FPA) fare much better, at least in principle. FPA scholars stress the importance of disaggregating the state and looking at the individuals and group dynamics that influence their decision-making. However, while this commitment to opening up the state allows for a great deal more flexibility vis-à-vis different types of actors, FPA research has so far remained state-centric and only very recently turned to non-state actors. On the other hand, non-state actors’ involvement in policymaking is the strong suit of the literature on globalization and global governance, which has spent a lot of time and effort analyzing various forms of “hybrid” governance. At the same time, however, this literature has been rather descriptive, so far mainly systematizing different governance arrangements and the conditions under which non-state actors are included in governance arrangements. This literature could profit from foreign policy research’s rich theoretical knowledge in explaining policy outcomes in hybrid governance networks and international organizations (IOs). Foreign policy researchers should take non-state actors seriously. In this regard, three avenues in particular are relevant for future research: (1) comparative empirical research to establish the extent of non-state actors’ participation in foreign policymaking across different countries and governance arrangements; (2) explanatory studies that analyze the conditions under which non-state actors are involved in states’ foreign policymaking processes; and (3) the normative implications of increased hybrid foreign policymaking for democratic legitimacy.

Article

Land Grabs: The Politics of the Land Rush Across Africa  

Pauline Peters

The currently extensive land appropriation across Africa signals the most radical shift in the distribution and tenure status of land since colonial times. The first alarms about “land grabs” by foreigners were raised by advocacy groups around 2007–2008. The search for land, always watered land, by foreign agents is driven by concerns about rising food and oil prices, and most of the acquired land is put under food crops, biofuels, and flex crops. The promises of profits from the exceedingly low price of land across Africa, as well as the rising demand for the mentioned crops, have also attracted speculation by private equity funds. With more detailed research on the processes and effects of this shift in rights to (and use of) land, the focus on a “new scramble” by foreign agents has extended to the multiple processes involved in the increasing demand for Africa’s land, internally and externally. The increase in acquisition of land by international agents, not only for cultivation but for minerals, oil, timber, and so forth, exacerbates the accelerating demand for land within African countries by nationals such as salaried, middle-class people and politicians acquiring land for cultivation and for an investment fast increasing in value. The millions of small-scale users of largely “customary” land struggle to derive a livelihood from their smallholdings and access to dwindling and increasingly enclosed common land, including grazing and watering areas. These linkages among local, national, and global dynamics of land acquisition reveal mounting socioeconomic and political inequality across Africa. In addition, research on the land rush reveals competing visions for African agriculture, invoking the debate of large- versus small-scale agricultural futures, a long-standing question of agrarian studies now being asked within much changed political-economic, social, and environmental conditions. Both macro-data and field studies show that most of the foreign acquired land is used for large-scale plantations, some of which include contract farming and outgrower schemes. Although, for a variety of reasons, some large land deals fold, the most recent Land Matrix data show most do move into production. Research on these large-scale projects has shown, however, that most fail to attain the projected aims of providing benefits to the countries and people from which they acquired the land. Most appropriated land was already in productive use by local users rather than “under-utilized” or “waste land” as described in many documents by investors and donors such as the World Bank; there were fewer benefits in the form of employment, higher and sustained income, and lower risk for most laborers, contract farmers, and outgrowers; far less infrastructure (schools, clinics, roads, etc.) built, as promised, for local populations; and output that is either exported or that proves unsuitable for the locales, with lower production value at lower efficiency compared with the land uses before the large-scale projects were put in place. These negative findings have to be set alongside the facts that the investors acquire the land at either extremely low cost (usually lease rather than sale) or even free, and receive tax, import/export and other “incentives.” The failure to benefit the millions of small- to medium-scale users of land, despite the rhetoric of land investors, major donors such as the finance arms of the World Bank Group, and governments facilitating the deals, has emerged as a key problem in light of deepening poverty, and a dearth of sufficient employment to absorb the young population, let alone people “exiting” from the land. Numerous experts conclude that a continued rapid alienation of land, especially to large-scale investors, will exacerbate localized land scarcity, restrict the potential of smallholder-led development, and put unrealistic pressure on the non-farm economy to absorb Africa’s rapidly rising labor force.