The dynamic value of MNE political embeddedness: The case of the Chinese automobile industry

Abstract

This paper examines the complex relationship between the embeddedness of multinational enterprises (MNEs) in host-country political networks and their long-run competitive positions in host emerging markets. We report the findings of a longitudinal study of the Chinese automobile sector from the early 1980s to the mid 2000s. Using data from 142 interviews over 11 years, and a wide range of secondary sources, we explore the process through which the value of political embeddedness changed over time in the face of profound and rapid changes in host-country business environments. On the basis of this longitudinal study, the paper unravels the underlying mechanisms that lead to the declining, and even negative, value of deep political embeddedness by MNEs in a politically stable emerging economy.

The impact of partner diversity within multiparty international joint ventures

“…Accounting for research that highlights the importance of equity distribution for the dissolution of IJVs (Beamish, 1985;Dhanaraj & Beamish, 2004), we also include the distribution of equity in the IJVs using a dummy variable taking on values of 1 for IJVs in which equity shares were distributed equally and 0 for unequal equity distributions. Given the role that state-owned actors play in the PRC as partners for foreign investors (e.g., Sun, Mellahi, & Thun, 2010), we controlled for government participation by using a dummy that takes on the value of "0" for no government/SOE, and "1" for government/SOE participation in the MPIJV. Further, as government policy towards foreign investors changed as a result of the PRC's entry into the WTO in 2001 (Lu & Ma, 2008), we included a dummy variable (Post 2001) taking on the value of "0" if a IJV was set up before or in 2001 and "1" for IJVs established after 2001.…”

The contingent effect of state participation on the dissolution of international joint ventures: A resource dependence approach

“…Host country governments can provide exclusive licenses to an IJV, protect it from negative interference by other market actors, grant exemptions from specific regulations, or guarantee currency conversion and profit repatriation (e.g., Brouthers & Bamossy, 1997, Luo, 2001. Although IJVs with private firms may also receive regulatory support, anecdotal evidence suggests that host governments on the whole tend to provide more support to IJVs with SCAs than to IJVs with privately-owned firms (e.g., Sun, et al, 2010a). …”

“…Research suggests that SOEs and government agencies 3 are the SCAs that are most likely to be involved in IJVs with foreign firms (e.g., Brouthers & Bamossy, 1997, Sun, et al, 2010a. Because SOEs and government agencies differ in their ability to absorb foreign firms' constraints with regard to critical assets, regulatory support and legitimacy, we expect the effect of state-participation on IJV dissolution to vary with the type of SCA involved in an IJV.…”

“…International joint ventures (IJVs) with state-controlled actors (SCAs) such as government agencies and state-owned enterprises (SOEs) play an important role for foreign firms operating in emerging economies (Brouthers & Bamossy, 1997, Collinson & Sun, 2011, Nguyen & Meyer, 2004, Sun, Mellahi, & Thun, 2010a. Although previous research has investigated a wide range of determinants of IJV dissolution 1 (e.g., Inkpen & Beamish, 1997, Xia, 2011, Yan & Gray, 1994, the literature remains silent on how state participation affects IJV dissolution (Barringer & Harrison, 2000, Nemeth & Nippa, 2013.…”

How powerful political ties appropriate resources and how weaker organizations protect themselves: A case study from Indonesia

“…Yet, we also know that political ties can derail firm strategy in various ways (e.g., Fan et al, 2007;Siegel, 2007). They may expropriate funds (Fan et al, 2007), become involved in corporate governance (Okhmatovskiy, 2010), demand bribes (Li, Yao, & Ahlstrom, 2015;Shleifer & Vishny, 1994), interfere with management (Ahlstrom, Bruton, & Lui, 2000) or introduce diverging goals (Sun, Mellahi, & Thun, 2010). Research finds that political ties are particularly salient in emerging economies (Faccio, 2006), where institutions may be weak and organizations substantially dependent on the government .…”