International Dispersion and Profitability: An Institution-Based Approach

García‐García, Raquel; Canal, Esteban García; Guillén, Mauro F.

doi:10.1007/s11575-019-00402-w

Cited by 6 publications

(7 citation statements)

References 159 publications

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“…At industry level, we include industry dummies to control for the focal industry of operation of the firm and a dummy indicating whether the firm operates in an infrastructure industry. We consider as infrastructure firms those operating in electricity, water, oil, gas, transportation, telecommunications and construction (Fernández-Méndez et al , 2015; García-García et al , 2019).…”

Section: Methodsmentioning

confidence: 99%

“…We build upon this research to propose that the experience accumulated in litigating with the home State shapes the internationalization of firms. This experience can be useful when operating in foreign countries, as regulatory differences are factors that increase the firms' liability of foreignness, thus conditioning the firms' location choice (Fern andez-Méndez et al, 2015) and profitability (García-García et al, 2019). Firms that possess creative compliance knowledge are better prepared to deal with the liabilities of internationalization and the ambiguities in foreign regulation.…”

Section: Creative Compliance and Fdimentioning

confidence: 99%

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Litigations with the home State and internationalization

Fernández‐Méndez

Canal

García‐García

2021

MBR

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Purpose This paper aims to investigate whether Foreign Direct Investment (FDI) can be driven by the creative compliance knowledge that firms gather in their home country through litigations with the government. Design/methodology/approach The authors draw on the knowledge-based view and organizational learning theory to argue that there is an inverted U-shaped relationship between experience in litigating with the home State and a firm’s level of FDI. The authors test this hypothesis using negative binomial regressions on a sample of Spanish listed firms for the period between 1986 and 2008. Findings The findings of this study confirm the hypothesized inverted U-shaped relationship between a firm’s experience in litigating with the home State and its FDI levels. Firms seem to face an exploration–exploitation dilemma regarding their compliance with domestic regulation. Once they have accumulated a certain amount of creative compliance knowledge, it would be better for them to exploit it both domestically and internationally in the form of creative compliance routines, instead of continuing to push the limits of regulation. Originality/value Firms willing to explore the gray areas of the law are usually forced to litigate with the State. As a result, they develop creative compliance knowledge that they can incorporate into their legal routines and capabilities so that they can later exploit it in foreign countries. To the best of the authors’ knowledge, this is the first paper that attempts to understand the influence of creative compliance knowledge on a firm’s international investments.

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Section: Methodsmentioning

confidence: 99%

Section: Creative Compliance and Fdimentioning

confidence: 99%

Litigations with the home State and internationalization

Fernández‐Méndez

Canal

García‐García

2021

MBR

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“…Institutional theory suggests that institutional norms vary from one country to another and are often tacit in nature, making it difficult for foreign subsidiaries to identify, understand, and implement them (Peng et al, 2008;García-García et al, 2019). The institutional differences between home and host countries usually results in an LOF (Zaheer, 1995;Petersen & Pedersen, 2002;Eden & Miller, 2004).…”

Section: Theoretical Grounding Of Lofmentioning

confidence: 99%

Foreignness research in international business: Major streams and future directions

Xie

2021

J Int Bus Stud

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Foreignness has long been a central construct in international business research, with research streams examining its conceptualizations, manifestations, and consequences. Researchers started by taking foreignness to be a liability, then later considered the possibility of its being an asset. A still more recent view is that foreignness is an organizational identity that a firm can purposefully manage. Broadly conceived, foreignness is an umbrella construct that directly or tangentially covers research on country of origin, institutional distance, firm-specific advantages, and the ownership–location–internalization eclectic paradigm. We review the body of research on foreignness and track the evolution of its four streams, liability of foreignness, asset of foreignness, drivers of foreignness, and firm responses to foreignness. We call for a clearer conceptualization and a sounder theoretical grounding of the foreignness construct, more integration of the liability of foreignness and the asset of foreignness research streams, greater attention to the multiple strategies firms use to manage foreignness, and the extension of the field to less-explored contexts such as emerging economies, digitalization, and de-globalization.

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“…In particular, there has been no previous empirical testing of whether there are significant differences in deal abandonment and ownership strategy in cross-border and domestic M&As. The studies on M&A completion have adopted institutional theory or a regulatory perspective (Dikova et al, 2010 ; García-García et al, 2019 ; Muehlfeld et al, 2007 ). They have documented that mainly in overseas markets and argued that SCE acquirers have lower favorability than PCE acquirers and face more significant legitimacy problems (Zhou et al, 2016 ) due to liability of emergingness (Madhok & Keyhani, 2012 ) and SCEs’ opaqueness (Li et al, 2019 ).…”

Section: Introductionmentioning

confidence: 99%

“…However, the different purposes and strategic behaviors of SCEs and PCEs in both domestic and overseas markets have received less theorization and conceptual support. Although institutional theory (García-García et al, 2019 ; Peng et al, 2008 ) mostly explains the negative effect of SCEs, it cannot consistently explain why SCEs become active in some fields but face bleak odds in other fields; SCEs are facing two kinds of legitimacy issues in home and host countries. For example, in the previous studies in international business, researchers focused on institutional pressures in the host country and SCEs’ disadvantages (Li et al, 2017 , 2019 ; Voinea & van Kranenburg, 2018 ; White et al, 2018 ) but less discussed legitimacy and potential actions in the home country.…”

Section: Introductionmentioning

confidence: 99%

The Zone of Conformity: A Comparison of Private and State-Controlled Enterprises in M&As

Sun

2023

Manag Int Rev

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Drawing from the literature on institutional pressure, we argue that firms with different ownership types have different strategic options in domestic and overseas markets, namely the zone of conformity. State-controlled enterprises (SCEs) have a broader range of acceptable actions than do private-controlled enterprises (PCEs) in a domestic market but face more sanctions and stricter conformity requests in an overseas market. The concept of the zone of conformity predicts SCEs have a higher probability of deal failure overseas than in domestic markets and strategically seek less equity ownership of target firms in cross-border deals. The autocracy level of target country moderates the M&A behaviors difference between SCEs and PCEs. Our analysis of 12,497 Chinese mergers and acquisitions supports the study hypotheses. Supplementary Information The online version contains supplementary material available at 10.1007/s11575-023-00501-9.

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International Dispersion and Profitability: An Institution-Based Approach

Cited by 6 publications

References 159 publications

Litigations with the home State and internationalization

Litigations with the home State and internationalization

Foreignness research in international business: Major streams and future directions

The Zone of Conformity: A Comparison of Private and State-Controlled Enterprises in M&As

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