Session 377

Organizing Assets Across Borders: Drivers and Consequences

Track G

Date: Tuesday, September 23, 2014

 

Time: 15:30 – 16:45

Paper

Room: Bruselas


Session Chair:

  • Elizabeth Rose, University of Otago

Title: An Empirical Examination of a Transaction Cost Explanation of FDI Capital Structure

Authors

  • Asmund Rygh, BI Norwegian Business School
  • Gabriel R G Benito, BI Norwegian Business School

Abstract: The literature on capital structure decisions of multinational enterprises for their subsidiaries is dominated by studies of tax planning, although some other motivations such as limiting political risk and overcoming host-country capital market imperfections have also received attention. In this proposal, we outline a study taking a strategic perspective on MNE subsidiary capital structure, based on Williamson’s (1988) transaction cost theory of finance. Using subsidiary-level Norwegian foreign direct investment data over the period 2000 to 2006, we investigate the impact of important transaction cost theory variables such as asset specificity and external uncertainty on the relative use of equity versus external and internal debt. Preliminary analyses only partially support a transaction cost view of subsidiary-level financing decisions.

Title: Backward Integration of Foreign Sales Activities into Production: An Operational Flexibility Perspective

Authors

  • Jan Hendrik Fisch, WU-Vienna
  • Björn Schmeisser, WU-Vienna

Abstract: This study focuses on the decision to expand existing foreign sales activities towards production, thereby substituting exporting by local production as international operation mode. Complementing traditional theories on foreign direct investment and the internationalization process of the firm, it is suggested that multinational enterprises pursue backward integration of foreign subsidiaries in order to exploit arbitrage opportunities in their existing network of foreign operations. We predict that, besides well-known factors, fluctuations in exchange rates, differences in corporate income tax regimes, investment incentives granted by host governments, and external knowledge at other foreign locations explain backward integration of foreign sales activities into production. We aim to test our hypotheses using event history analysis on a dataset of 382 manufacturing firms showing 514 cases of backward integration between 1999 and 2011.

Title: Foreign Equity Ownership, Corporate Energy Intensiveness and Carbon Emissions

Authors

  • Byung Min, Griffith University
  • Peter Verhoeven, Queensland University
  • Carl Joachim Kock, IE Business School

Abstract: This paper examines how energy intensiveness and carbon emissions relate to foreign equity ownership for a sample of Japanese listed industrial firms during 2003-2010. We find that energy intensiveness and carbon emissions are negatively associated with foreign equity ownership. This negative association is more evident for foreign institutional investors than for foreign individual investors. Our results also suggest that low foreign institutional investment in energy intensive firms is largely through intermediation effects of carbon emissions.

Title: The Impact of Internationalization on Performance in Regulated and Non-Regulated Firms

Authors

  • Raquel García-García, Open University
  • Esteban García-Canal, University of Oviedo
  • Mauro Guillen, University of Pennsylvania

Abstract: We add to the literature on the internationalization-performance relationship by differentiating between regulated and non-regulated industries. We argue that both face liabilities at the beginning of their internationalization that damage their performance, but once they are overcome, after gaining enough international experience, further international expansion leads to increases in performance. However, whereas there is an internationalization threshold upon which non-regulated firms return to the path of value destruction, in the case of regulated firms this threshold does not exist. Therefore, the performance of multinationals operating in regulated industries displays a U-shaped pattern while the one in non-regulated industries has an S-shaped nature. We confirm our predictions by estimating Heckman’s two-stage models (1979) on a panel data sample from 1986 to 2010 which includes all Spanish listed firms in 1990.

All Sessions in Track G...

Sun: 08:00 – 09:15
Session 389: Managing the Multinational Organization in an Increasingly Complex World
Sun: 09:30 – 10:45
Session 221: Global Stakeholder Networks
Session 390: Local Determinants of Competitive Advantage and Disadvantage
Sun: 11:15 – 12:30
Session 2: Offshore Outsourcing, Dynamic Capabilities, and the Changing Nature of Firm Boundaries
Sun: 15:45 – 17:00
Session 270: Innovation in MNCs and Global Networks
Session 371: Inter and Intra Organizational Learning Across Borders: A Knowledge Management Perspective
Session 380: Small, Young and Entrepreneurial Firms: A Unique Perspective in Globalization
Sun: 17:15 – 18:30
Session 603: Global Strategy IG Business Meeting
Mon: 08:00 – 09:15
Session 335: Internationalization and Strategic Decisions
Session 379: Emerging Markets: Understanding the Importance of Context
Mon: 11:00 – 12:15
Session 372: The Challenges of Global Operations: Managing R&D and Complexity
Session 373: Global Diversification: Governance and Performance Implications
Mon: 14:45 – 16:00
Session 375: Changing External Environments: How do Multinationals Respond?
Session 381: Firm boundaries in Multinational Organizations: Antecedents and Consequences
Session 414: Global Networks and Business Groups
Mon: 16:30 – 17:45
Session 226: Culture, Norms and Institutions: The contextual influences on Entrepreneurship
Session 374: Antecedents and Consequences of Multinational Location Decisions
Session 382: Drivers of Multinational Performance:What, Where and When?
Tue: 08:00 – 09:15
Session 383: Globalization of R&D: Implications for Learning and Innovation
Tue: 11:00 – 12:15
Session 376: Headquarters Subsidiary Relationship: New Approaches to an Old Question
Session 384: Multinational Location Decisions: New Approaches Across Different Perspective
Tue: 15:30 – 16:45
Session 263: Innovation Models in Emerging Economies
Session 377: Organizing Assets Across Borders: Drivers and Consequences
Session 385: Multinational firms and the External Environment: The Role of Institutions
Tue: 17:15 – 18:30
Session 378: Global Outsourcing & Offshoring: Implications for Multinational Decisions


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