Information Costs in International Business: Analyzing the Effects of Economies of Scale, Cultural Diversity and Decentralization

Richter, Nicole

doi:10.1007/s11575-013-0187-y

Cited by 25 publications

(24 citation statements)

References 68 publications

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“…Information costs arise from communication and coordination failures between HQ and subsidiaries (Casson 1999;Fisch and Zschoche 2011;Richter 2014). These costs are significant if they, in turn, make subsidiaries less capable of reacting rapidly to changing conditions.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…Distance generally limits subsidiary visibility from HQ and increases costs of activity coordination (Richter 2014). Distance between headquarters and subsidiaries decreases interaction and thereby communication and information (Casson 1999;Fisch and Zschoche 2011).…”

Section: Distance and Subsidiaries' Perception Of Ex Post Organizing mentioning

confidence: 99%

“…Here, we turn the table and examine how such costs appear from the perspective of subsidiaries. Richter (2014), Tomassen and Benito (2009), and Tomassen et al (2012) demonstrate how operating through foreign subsidiaries is not a panacea, especially in terms of organizing costs (Schweiger et al 2003). Making a foreign direct investment (FDI) does not rule out positive organizing costs or per se ensure such costs reach their lowest feasible level.…”

Section: Introductionmentioning

confidence: 99%

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Dealing with headquarters in the multinational corporation: a subsidiary perspective on organizing costs

et al. 2019

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This study examines how subsidiaries in multinational corporations (MNCs) experience interactions with corporate headquarters. We conceptualize such interactions in terms of organizing costs, focusing on two key types of costs: bargaining costs and information costs. Specifically, we examine how distance, coordination mechanisms, and atmosphere influence the level of organizing costs in the headquarter-subsidiary relationship. Using survey data collected among 104 subsidiary managers in two MNCs, we show that relationship atmosphere significantly reduces both types of organizing costs, whereas distance increases bargaining costs. We also find that centralization and formalization reduce information costs, whereas social integration, contrary to our hypothesis, increases bargaining costs.

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Section: Theory and Hypothesesmentioning

confidence: 99%

Section: Distance and Subsidiaries' Perception Of Ex Post Organizing mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Dealing with headquarters in the multinational corporation: a subsidiary perspective on organizing costs

et al. 2019

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“…The direct benefits were said to include reduction in financial risk due to geographic diversification of investment (Markowitz 1959;Shapiro 1978;Kim, Hwang and Burgers 1993), arbitrage of differentials in location-based endowments (Delios and Beamish 1999), profiting from linkage, leverage and learning in cross-border cooperations (Mathews 2002(Mathews , 2006, and costsavings through scale economies (Hitt, Hoskisson and Kim 1997). The direct costs were believed to include operation costs related to the liabilities of foreignness (Zaheer and Mosakowski 1997), learning costs associated to the liabilities of newness (Caves 1971), and coordination costs in managing dispersed value chain across the globe (Hitt, Hoskisson and Kim 1997;Bartlett and Ghoshal 1989;Sunderam and Balck 1992;Tomassen and Benito 2009;Richter 2014). In particular, Richter (2014) was among the first who have actually attempted to measure these costs.…”

Section: Introductionmentioning

confidence: 99%

“…The direct costs were believed to include operation costs related to the liabilities of foreignness (Zaheer and Mosakowski 1997), learning costs associated to the liabilities of newness (Caves 1971), and coordination costs in managing dispersed value chain across the globe (Hitt, Hoskisson and Kim 1997;Bartlett and Ghoshal 1989;Sunderam and Balck 1992;Tomassen and Benito 2009;Richter 2014). In particular, Richter (2014) was among the first who have actually attempted to measure these costs. The focus on direct benefits and costs eventually led to the formulation of a "three-stage or S-shaped general theory" of the T-P relationship (Contractor 2007: 453; also see Contractor, Kumar and Kundu 2007;Contractor, Kundu and Hsu 2003;Lu and Beamish 2004;Thomas and Eden 2004;Contractor 2012).…”

Section: Introductionmentioning

confidence: 99%

Transnationality and Financial Performance in the Era of the Global Factory

Buckley

Tian

2016

Manag Int Rev

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ABSTRACT. Drawing on the core notions of knowledge augmentation and rational choice in internalization theory, the paper develops a theoretical framework to examine the relationship between transnationality and financial performance in the era of the global factory, and tests hypotheses against recent experience of leading transnational enterprises. The paper rejects a direct relationship between transnationality and financial performance, and supports a mediation model in which knowledge-based assets mediate the relationship between transnationality and financial performance conditional on R&D intensity. In making decisions on the transnationality of a firm, managers should not focus on whether it helps the firm achieve direct financial benefits because these are quickly offset by the costs in a competitive environment. Instead, they should focus on whether it helps the firm enhance knowledge-based assets and, through it, financial gains that can be long-lasting, and whether it is supported by R&D to augment such assets.

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State ownership and international expansion: The S‐curve relationship

Kalasin

Cuervo-Cazurra

Ramamurti

2019

Global Strategy Journal

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Research SummaryWe study how state ownership affects the international expansion of emerging‐market firms. Building on agency theory and the resource‐based view, we propose an S‐curve relationship: Firms with a low level of state ownership have a limited level of international expansion, those with a medium level of state ownership have an increasing level, and those with a high level of state ownership have a decreasing level. This S‐curve is the outcome of the interaction between the “hindering hand” of state ownership, arising from multilevel agency problems, and the “helping hand,” arising from state‐ownership advantages. Analyses of 674 publicly traded firms from 16 emerging markets support these ideas and reveal that the inflection points in the S‐curve appear at state‐ownership levels of 19 and 43%.Managerial SummaryState ownership of emerging‐market firms results in their international expansion following an S‐curve pattern because state ownership has hindering and helping influences. Firms with low state ownership have a limited level of international expansion because they are subject to government interference but receive limited support. Firms with a medium level of state ownership have an increasing level of international expansion because they have greater access to resources while the negative effects of state control are restrained by the dominance of private owners. Finally, firms with a high level of state ownership have a decreasing level of international expansion because the advantage of resource provision is offset by tight state controls. We illustrate these ideas through the analyses of 674 firms from 16 emerging markets.

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Information Costs in International Business: Analyzing the Effects of Economies of Scale, Cultural Diversity and Decentralization

Cited by 25 publications

References 68 publications

Dealing with headquarters in the multinational corporation: a subsidiary perspective on organizing costs

Dealing with headquarters in the multinational corporation: a subsidiary perspective on organizing costs

Transnationality and Financial Performance in the Era of the Global Factory

State ownership and international expansion: The S‐curve relationship

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