Abstract Research Summary The resurgence of geopolitical rivalry is challenging core assumptions of global strategy theory. Long‐standing views that economic interdependence is inherently beneficial, governments act as rule setters, multinational enterprises operate autonomously, and market and political strategy are separate no longer capture today's international business environment. We argue that, in an era of politicized interdependence, governments increasingly act as system‐level strategists, using economic statecraft to shape multinational enterprises and global value chains in pursuit of economic security. Consequently, economic interdependence has become a source of both prosperity and strategic vulnerability, firm autonomy is constrained by government priorities, and competitive advantage depends on integrating market and political strategy. We develop a framework distinguishing strategic sectors characterized by state co‐strategizing from non‐strategic sectors where market logics continue to dominate. Managerial Summary This article argues that recent geopolitical tensions are reshaping how multinational companies operate globally. Traditionally, global strategy theories assumed that governments mainly created stable rules while firms independently pursued efficiency and growth. The paper shows that this assumption no longer fully holds. Especially in strategic sectors, governments use public policy actions to reshape international business with the aim of strengthening their country's economic security. For managers in strategic sectors, this means that geopolitical considerations cannot merely be treated as an external risk managed by compliance or government affairs teams. They must more deeply integrate their political strategies with their competitive strategy.
Abstract Research Summary In their Point article, Van Assche and Lindner argue that recent geopolitical developments require revisiting theoretical assumptions underlying global strategy research. We question both the scope of the empirical changes they describe and the implication that existing frameworks have become inadequate. Rising state activism is significant but uneven across countries and sectors. Calls for revising core assumptions risk conflating contextual shifts with theoretical limitations. We argue that established theoretical traditions remain valuable when applied with conceptual precision and empirical discipline. We illustrate this using new internalization theory to explain firm–state interaction under geopolitical volatility. We then outline five pathways for engaging with existing theory to address empirical shifts, drawing on concrete examples of classic strategy and international business theories. Managerial Summary Today's global business environment is more politically charged and less predictable than in recent decades. Governments are intervening more actively, geopolitical tensions are reshaping supply chains, and multinational enterprises (MNEs) face growing pressure from regulators and society. Our study argues that these changes do not make existing global strategy frameworks obsolete. Rather, they make them more necessary. Established ideas continue to help managers organize cross‐border operations under uncertainty, manage complex interdependencies with governments and partners, and respond strategically to increasingly turbulent environments. The practical message is that MNE managers do not need an entirely new toolkit to navigate current disruption. In their strategic planning, managers need to apply existing strategic tools more carefully, broadly, and consistently.
Abstract Research Summary Under what conditions do headquarters replace the general manager (GM) of an underperforming subsidiary? We argue that translating performance feedback into managerial intervention requires an inferential step the behavioral theory of the firm has only partially theorized. Headquarters must attribute shortfalls to managerial agency, and the diagnosticity of performance cues is shaped by organizational separateness within multinational enterprises (MNEs). Using data on 891 foreign market‐seeking subsidiaries of Japanese MNEs (1991–2020), we find that subsidiary underperformance increases GM turnover. However, this relationship is contingent and non‐uniform. It weakens with cultural distance between headquarters and subsidiaries (spatial separateness) and strengthens when a regional headquarters (RHQ) is present (stratal separateness). These findings extend behavioral theory to the international context by highlighting how organizational separateness shapes managerial turnover in MNEs. Managerial Summary When foreign subsidiary performance falls short of expectations, headquarters must decide whether to replace the subsidiary's general manager (GM). Using data from 891 foreign market‐seeking subsidiaries of Japanese multinational enterprises, we find that underperformance increases the likelihood of GM turnover. However, this relationship is not the same across all subsidiaries. Headquarters are less likely to respond to underperformance with leadership changes when subsidiaries operate in culturally distant countries, but more likely to do so when a regional headquarters (RHQ) is present. For managers, these findings suggest that performance‐based leadership decisions are shaped not only by results, but also by the organizational structures and relationships through which headquarters evaluate subsidiary performance.
Research Summary This study examines how rising Chinese outbound foreign direct investment (OFDI) in third-country markets shapes US MNEs' foreign direct investment location decisions amid escalating US-China geopolitical rivalry. US firms initially benefit from complementary co-location dynamics, as Chinese OFDI-particularly in infrastructure-creates quasi-public goods that lower operating costs and expand market opportunities. However, these advantages erode as rivalry intensifies through two mechanisms: asymmetric benefit appropriation in Belt and Road Initiative (BRI)-participating countries, where infrastructure investments disproportionately favor Chinese firms, and heightened security and knowledge-spillover risks in strategic industries. Using a firm-host country-year panel, we find that Chinese OFDI positively influences US firms' location choices, but that this effect weakens significantly in BRI-participating countries and strategic industries. These findings highlight how geopolitical rivalry conditions co-location decisions beyond the traditional economic logic of agglomeration.Managerial Summary US companies increasingly face a question: should they invest in countries where Chinese firms are rapidly expanding? Our study finds that, in practice, they often do-US firms tend to follow Chinese investment into the same markets. Chinese investment frequently helps build roads, ports, and supply networks and boosts local demand, making these countries more attractive to operate in. But this logic has limits. As US-China tensions rise, sharing a market with Chinese firms carries real downsides. These risks are more pronounced in BRI-participating countries and in industries important to national security, where benefits flow mainly to Chinese firms and valuable know-how may leak to competitors. Managers increasingly need to weigh geopolitical risk as a central factor when deciding where to invest abroad.
Research Summary: This article develops a conceptual framework for understanding multinational enterprise (MNE) resilience in the era of cascading crises. We define resilience as the MNE's capacity to absorb disruption, maintain or restore functioning, and reconfigure operations as conditions shift. We argue that cascading crises complicate simple return to a pre-crisis equilibrium because shocks are increasingly interdependent and propagate across nested individual, organizational, institutional, and ecosystem levels. Anchored in organizational resilience and systems thinking, we develop a multilevel framework linking cascading crises, organizational responses, and resilience outcomes. By clarifying the core constructs and emphasizing cross-level feedback, this study advances a more holistic global strategy perspective on resilience building amid cascading crises. Managerial Summary: MNEs increasingly face cascading crises: disruptions that begin in one domain but spread across geographies, institutions, supply chains, and stakeholder relationships. Traditional risk management remains useful, but prediction, avoidance, and control are insufficient when crises interact and evolve over time. This article offers a framework for understanding how MNEs build resilience by assessing crisis relevance, managing organizational constraints, developing buffering practices, coordinating across institutional contexts, and reinforcing trust, legitimacy, incentives, and learning. The framework helps managers move beyond short-term coping toward resilience building that preserves critical functioning, supports adaptation, and enables strategic reconfiguration under turbulent global conditions.
Research Summary This study examines how international diversification interacts with government affiliation to shape innovation outcomes in emerging market firms. We reconceptualize government affiliation as a resource-structuring mechanism that varies across hierarchical levels and influences the coherence of firms' dominant logics of innovation. We highlight that firms affiliated with middle-level governments face fragmented resource environments and ambiguous innovation priorities. International diversification does not merely provide additional resources; rather, exposure to diverse institutional environments requires interpretive integration that fosters openness and organizational coordination, consolidating dominant logic coherence. Using panel data on Chinese listed firms, we find that middle-level-affiliated firms exhibit weaker innovation outcomes, whereas international diversification mitigates this disadvantage. Our findings clarify the links among affiliation heterogeneity, global strategy, and innovation and help reconcile prior mixed evidence.Managerial Summary Emerging market firms often maintain ties to different levels of government, shaping their access to innovation-related resources and strategic priorities. Our findings suggest that firms affiliated with middle-level governments face unique innovation challenges. These firms receive partial state support but lack clear direction from either state or market forces, leading to ambiguity in innovation strategies. International diversification can help address this challenge. By operating across diverse institutional environments, firms are exposed to alternative practices and performance benchmarks that encourage openness and strengthen organizational coordination. This process helps consolidate clearer innovation priorities and improves innovation outcomes. For managers of middle-level-affiliated firms, international expansion may therefore serve not only as a growth strategy but also as a means of strengthening innovation coherence. More broadly, the benefits of international diversification depend on firms' domestic institutional positioning with particular levels of government.
Research Summary: Multinational firms conduct cross-border trade and investment in a world of anarchy, where nation-states must secure their survival in the absence of a world government. We develop a geopolitical-economic order (GEO) framework to argue that the extent of geopolitical competition incentivizes states to create one of two types of economic order: a market-based order built on laissez-faire and mutually beneficial voluntary exchanges, and a state-based order focused on state power and government intervention in the economy. Different orders shape the institutional environment for firms' cross-border activities in unique ways, leading to distinct sources of competitive advantage and market and non-market strategies. When the status quo level of geopolitical competition is disrupted, the prevailing and future state-market order becomes uncertain, forcing firms to prioritize strategic flexibility. Managerial Summary: Countries exist within an international system with no world government to safeguard their interests. To ensure their nations security, governments prioritize geopolitics. When governments perceive a greater threat to their countries and heightened geopolitical competition, they are more willing to intervene in the affairs of multinational enterprises (MNEs), thereby increasing transaction costs. However, when geopolitical competition is more muted, governments may constrain themselves to promote cross-border investments by lowering barriers to entry, limiting discrimination against foreign firms, securing MNEs' property rights, and aligning regulations. Thus, geopolitics can foster two distinct types of economic "order." In a transitory state, however, firms cannot determine the prevailing state-market relationship. Knowing which order a firm operates in is crucial for managers because different orders reward different strategies and sources of competitive advantage.
Research Summary The rise of emerging market lead firms (LFs) in global value chains (GVCs) challenges the prevailing view that only multinational corporations (MNCs) from advanced economies lead systems integration, design, and innovation activities. In this paper, we explain how emerging market firms (EMFs) learn to lead in GVCs for complex product systems. We show how civil aircraft LFs in China overcame initial gaps in process and organizational knowledge to lead design and systems integration functions while ensuring compliance with national and global regulations. Our process model of EMF learning to lead is driven by two mechanisms: reconfiguring a GVC and leveraging MNC partnerships. Implementing a multi-sourcing strategy, EMFs establish co-lead partnerships that enable them to learn the design-for-compliance capabilities necessary to lead GVCs.Managerial Summary Emerging market firms (EMFs) seek to add value in global value chains (GVCs) by upgrading their capabilities. In this study, we focus on how EMFs develop the core capabilities necessary to become lead firms (LFs) in GVCs for complex product systems (CoPS). In CoPS GVCs, LFs must be able to coordinate innovation, product development, and regulatory compliance across a network of suppliers responsible for various systems and components. Industrial and institutional barriers limit EMFs' capacity to develop the capabilities necessary to become LFs in CoPS GVCs. Our case study of two firms in the Chinese civilian aircraft GVC reveals how EMFs can leverage a multi-sourcing strategy that enables them to learn to lead by establishing co-lead partnerships with multinational corporations.
Research Summary This paper examines how foreign direct investment (FDI) shapes firms' sourcing of knowledge in the digital and green domains under rising geopolitical frictions. We assemble a firm-country dyadic panel (2013-2020) linking US patent backward citations to firms' FDI, enriched with bilateral geopolitical distance and host-country geopolitical risk (GPR), and estimate a gravity model of knowledge flows. We find that while in green technologies both the presence and cumulative scale of FDI are robustly associated with higher local knowledge integration, in digital technologies FDI effects are weaker and emerge through innovative mergers and acquisitions. Geopolitical distance is systematically associated with lower learning payoffs from FDI, especially in green activities, while host-country GPR tends to weaken green FDI returns but to interact positively in the digital domain.Managerial Summary This study shows that foreign direct investment (FDI) remains an important channel through which US firms tap foreign expertise, but its effectiveness depends on sector, entry mode, and geopolitics. In green technologies, FDI is consistently associated with greater absorption of host-country knowledge, but these benefits are lower when host countries are geopolitically distant or politically riskier. In digital technologies, smaller or generic investments yield limited learning gains, whereas more targeted and innovation-oriented investments, especially innovative acquisitions, are more effective. Unlike in green sectors, political risk in digital settings does not systematically undermine learning and may sometimes support the value of selected investments.
Research Summary Sharing knowledge through organizational practices is an important source of advantage for multinational corporations (MNCs). While prior research on practice adoption by subsidiaries of MNCs has identified several individual and organizational factors, this study examines their interplay in the context of HQ-mandated practices. Drawing on trait-activation theory and zooming in on the complex and nested HQ-subsidiary relationships, we propose that recipient-unit managers' core self-evaluations (CSE) interact with situational features at different levels-the recipient-unit, the practice, and the country levels-to shape adoption of HQ-mandated practices in MNCs. Using a sample of 130 recipient-unit managers in a European MNC, our findings support most theoretical predictions but also reveal variation in situational influences across levels of analysis. With this multi-level interactionist model of trait activation, we advance a relational perspective on practice adoption in MNCs and contribute to the microfoundations perspective in international strategy.Managerial Summary Corporate headquarters (HQ) in multinational corporations can share knowledge by rolling out practices to subsidiaries to achieve synergies, efficiencies, and compliance. Yet the adoption of these practices by subsidiaries can vary substantially. This study shows that recipient-unit managers' personality traits influence practice adoption across different contextual situations. Recipient-unit managers with stronger personality traits-such as higher self-confidence and proactiveness-have a positive effect on practice adoption. More importantly, however, the situational context shapes this effect: While formal rules (structural coordination) may suppress it, informal means (relational coordination), the types of knowledge involved, and greater distance between HQ and subsidiaries can enhance it. Accordingly, the study suggests that competent managers matter, but that their role in practice adoption is shaped by the specific context.
Research Summary This study examines the role of firms' experience in shaping strategic decisions to relocate offshored activities. Adopting an experiential learning perspective, we test the influence of two types of experience-international production experience and reshoring experience-on the choice of relocating to another foreign country (i.e., further offshoring), the home region (i.e., nearshoring), or the home country (i.e., reshoring). The study highlights the contrasting influence of the different types of experience, the narrower relevance of reshoring experience to relocation decisions, and the potential substitution effect between further offshoring and nearshoring. It extends international strategy literature by highlighting how different types of experience influence relocation decisions, and reshoring research by introducing the concept of reshoring experience and by examining reshoring alongside other relocation options.Managerial Summary Firms frequently reconsider where to locate international operations to stay competitive. This study explores how firms' experience influences decisions to relocate activities to the following alternatives: another foreign country (i.e., further offshoring), the home region (i.e., nearshoring), or the home country (i.e., reshoring). We show that firms with extensive international production experience may favor further offshoring or nearshoring while being less inclined to reshore. Conversely, firms with prior reshoring experience tend to reshore, but face an internal managerial tension depending on the degree to which they possess each type of experience, as they exercise opposing forces on the reshoring decision. Managers should be aware of these patterns, which could facilitate, as well as limit, their relocation decision-making.
Research Summary: While multinational corporations (MNCs) can profoundly shape global development trajectories, global strategy research has largely treated development as peripheral to core strategic concerns. This Perspective paper examines the contested relationship between global strategy and development, arguing that MNCs are neither purely developmental agents nor simply extractive actors, but embedded participants whose strategic choices inevitably reshape host economies and societies. By reconceptualizing development from an "externality" to an "input into strategy," we propose a framework that distinguishes five orientations MNCs adopt toward development. Beyond ethical issues, since MNCs rely on development outcomes-such as skilled labor, stable institutions, and functioning markets-while simultaneously reshaping these very conditions, we argue that strategy and development are mutually constitutive processes that require integrated scholarly attention. Managerial Summary: Multinational executives face mounting pressure to address development challenges in host countries, yet many struggle to determine whether-and how-development concerns should shape global strategy. This paper clarifies why development matters for competitive success and offers a framework for strategic action. We argue that development and global strategy are fundamentally intertwined. Multinationals rely on the conditions that constitute development but also shape these conditions through their actions. Accordingly, the question is how to engage with development strategically. We identify five approaches MNCs take: (1) embed development into their core competitive advantage (transformative); (2) treat development as a peripheral consideration through CSR (symbolist); (3) engage primarily for legitimacy and reputation (instrumentalist); (4) generate positive spillovers without intention (accidental); and (5) prioritize efficiency with minimal local consideration (disengaged).
Research Summary This paper analyzes how reputational risk of petroleum companies from industrialized economies is affected by partnerships with companies from emerging markets with weaker regulatory standards. Using panel data analysis with company-host country pair and year fixed effects, we find that increased collaboration with companies from corrupt countries is associated with an increase in negative attention regarding local pollution. This negative reputational effect is driven by collaboration in corrupt host countries where emerging market companies have a comparative institutional advantage. Looking into mechanisms, we find no effect of collaboration on environmental conduct or policy, which is inconsistent with the mechanisms implied by institutional theory. Our results instead indicate that partnerships provide access to institutional capabilities of emerging market partners, suggesting collaboration is transactional rather than transformative.Managerial Summary When an American multinational corporation starts collaborating with a Chinese multinational, what happens to the reputation of the American company? More generally, when a company from a home country with strict rules and institutions decides to collaborate with a company from a country with less strict institutions, does this carry a reputational risk? Using data on petroleum company collaboration, we find that collaboration with companies from corrupt countries has a reputational cost. Western companies incur this cost to access emerging market companies' comparative institutional advantage in corrupt host countries. Our results provide guidance on size of reputational costs from collaboration, discusses strategic use of such partnerships for new entrants, and points out potential negative implications for international policy to address corruption in oil producing countries.
Research Summary Chinese MNEs face political risks from decoupling policies, particularly in the United States. Prior research explains when such policies arise but pays limited attention to divergent or conflicting treatment of the same firm by different government agencies within the same host market. Extending organizational stigma theory, we argue that severe decoupling occurs when labeling a firm as politically dangerous reaches a cross-audience tipping point, while lesser decoupling arises at audience-specific tipping points. We further conceptualize how such labeling diffuses across agencies and how firms can avoid or slow this process through audience dependence, division, and diminution strategies. Effectiveness depends on which audiences firms prioritize and when they intervene in the labeling process. Managerial Summary Amid intensifying geopolitical rivalries, Chinese multinational enterprises face decoupling risks that can vary across government agencies within the same host country. We explain how such divergent treatment emerges, arguing that severe decoupling occurs when labeling a firm as politically dangerous reaches a cross-audience tipping point, while more limited measures arise when labeling remains confined to specific agencies. We also show that firms can influence these outcomes by actively managing how political labels spread through audience dependence, division, and diminution strategies. Our perspective highlights that successfully managing political risk depends on which audiences firms prioritize and when they intervene in the labeling process.
Research Summary: High-tech firms often pursue serial cross-border acquisitions (CBAs) to sustain innovation and competitive advantage, thereby-intentionally or unintentionally-creating distinct patterns of temporal rhythm. While prior research highlights intra-firm rhythm dimensions (frequency, regularity, scope) or inter-firm dimensions (tempo, phase, scope entrainment), the empirical findings remain ambivalent. Drawing on fuzzy-set Qualitative Comparative Analysis (fsQCA) of 22 US high-tech serial cross-border acquirers, we identified four equifinal configurations- opportunistic experimentation, focused adaptation, cautious synchrony, and disciplined independence-linked to high performance, and three-rigid imitation, sporadic alignment, and erratic expansion-associated with low performance. Abductive theorizing from qualitative data reveals how firms manage change-stability and conformity-differentiation contradictions through the mechanisms of intensification, tilting, and suppression. Managerial Summary: Analyzing serial CBAs, we show how rhythm dimensions combine into configurations that shape performance. Four rhythm configurations enhance outcomes, while three hinder them. Managers should avoid treating attributes such as frequency or regularity as "silver bullets" and instead orchestrate rhythms holistically across firm and industry levels. In an era of rapid technological change, geopolitical risk, and rising nationalism, effective strategies often involve combinations characterized by high frequency, irregularity, narrow scope, and selective non-entrainment, assembled either to sustain independent rhythms or to pursue change-seeking and differentiation-seeking paths. By contrast, low-performing patterns tend to over-rely on external synchrony while neglecting internal constraints. Managers should adopt a configurational mindset, tailoring acquisition rhythms to their firm's strategic context rather than imitating competitors.
Research Summary We contribute to extant research on subunit sustainability governance by introducing the concept of sustainability-specific strategic alignment, that is, the pre-implementation degree of similarity in importance assigned by headquarters (HQ) and subunits to sustainability issues. We theorize and find that subunit-perceived divergence between HQ's and local stakeholders' priorities undermines alignment, clarifying why early attention alignment can stall sustainability diffusion even without implementation frictions. We furthermore examine the moderating effect of three HQ's control mechanisms (i.e., monitoring, direct management, and resource control), and find that direct management attenuates alignment loss even in high divergence contexts, whereas monitoring and resource control often fall short or backfire. Findings show that control mechanisms are not uniformly effective and must be tailored to subunits' agency problems and local contexts.Managerial Summary We argue that effective sustainability governance requires headquarters (HQ) and subunits to similarly prioritize sustainability issues. Our research shows that this sustainability-specific alignment depends, in part, on the extent to which HQs' sustainability priorities reflect those of local stakeholders. When this perceived divergence is high, alignment suffers. We examine how HQ can respond through three control mechanisms: monitoring, direct management, and resource control. We find that only direct management supports alignment under high divergence. These findings highlight that not all control tools are equally effective and that multinational companies need to carefully manage sustainability goals across borders to ensure coherent and credible sustainability efforts across their subunits' networks.
Research Summary How do small and medium-sized enterprises (SMEs) respond to multiple exogenous shocks in export markets? Drawing on real options theory (ROT), we analyze a unique data set of 2975 French SMEs over the period 2015-2020. We show that, when facing low-intensity shocks, SMEs expand the breadth of their export market portfolio, thereby enhancing switching options across regions. As shock intensity increases, they reduce the breadth while sharply increasing the depth of their export market portfolio, thereby strengthening growth options within their home region. Moreover, SMEs react more strongly to natural shocks (natural and climatic disasters, epidemics) than to human-induced shocks (armed conflicts, terrorist attacks, and industrial disasters). We advance our understanding of SME internationalization under uncertainty and contribute to embedding ROT into international business research.Managerial Summary This study provides insights for SME managers on how to optimize export strategies in the face of exogenous shocks. Initially, diversifying export markets can offer SMEs the flexibility to switch and grow, effectively navigating uncertainties. However, as shock exposure intensifies, concentrating efforts on fewer, safer markets can mitigate risks and ensure business stability, making it essential to prioritize export market portfolio depth over breadth. Understanding that SMEs react more strongly to natural shocks than human-induced shocks can guide managers in tailoring their export strategies based on the type of shock to enhance resilience. Integrating real options reasoning into international decision-making processes can improve strategic planning, enabling managers to better assess and respond to dynamic market conditions.
Research Summary Peer firms tend to imitate each other's location choices for foreign subsidiaries. We examine whether they also engage in location choice imitation when undertaking rare, high-stakes foreign ventures in the form of tax-motivated relocations of headquarters. Although location choices for such relocations will likely be made meticulously, we propose that these choices are nevertheless subject to imitation among compatriots, and particularly among domestic rivals. Applying organizational institutionalism, we argue that by imitating these peers, relocating firms reduce the uncertainty they perceive and partly legitimize their relocation. We also predict moderating effects of relocating firms' presence in a location and of their subnational home region's cultural tightness. We find support for these ideas studying the location choices announced by US relocating firms between 1996 and 2017. Our study extends global strategy research on location choice imitation to the corporate level, revealing that such imitation even occurs among firms undergoing international transformations.Managerial Summary Similar companies, or "peers," often follow each other to the same location when setting up operations abroad. We examine whether peers also imitate each other's location choices when relocating their headquarters abroad for tax reasons. While firms making this rare and bold move will likely choose a destination carefully, we argue that they nevertheless tend to imitate their compatriots' and especially their domestic rivals' location choices, so as to reduce the uncertainty they experience about countries' attractiveness and justify their relocation domestically. We also propose that a firm's tendency to imitate peers' most popular location choices depends on the firm's knowledge of foreign locations and the strength of social norms in its subnational home region. We find support for these ideas in a study of US firms that announced relocations between 1996 and 2017. Firms thus even engage in location choice imitation when undergoing international transformations.
Research Summary This study investigates how multinational enterprises' (MNEs') commitment to corporate social responsibility (CSR) affects intra-firm trade in international subsidiaries. While CSR-committed MNEs need to protect their reputation, intra-firm trade can facilitate monitoring and coordinating the behavior of MNEs' international subsidiaries. Such governance functions help these MNEs mitigate challenges related to bounded rationality and reliability, ultimately reducing governance costs. Thus, we expect CSR-committed MNEs to be more likely to engage in intra-firm trade in their international subsidiaries. We further predict that the positive relationship is contingent upon host country corruption and MNE alliance experience, which may amplify or mitigate the levels of bounded rationality and reliability, respectively. We tested our theories using Korean MNE data during the 2006-2013 period and found empirical support.Managerial Summary While MNEs are increasingly embracing CSR, CSR's impact on MNE governance choices (particularly in international subsidiaries) is not fully understood. This study proposes that intra-firm trade serves as both formal and informal governance mechanisms which protect the CSR-built reputation of MNEs internationally. Our analysis of Korean MNE data shows that MNEs' CSR commitment increases intra-firm trade in international subsidiaries. This effect is pronounced in corrupt host countries but is attenuated in MNEs with more alliance experience. Our findings suggest that MNEs' CSR-built reputation should be protected by preventing irresponsible behavior in their international subsidiaries. Additionally, this study underscores that intra-firm trade plays a pivotal role as a governance tool for MNEs.
Research Summary Parallel with the growing volume and value of data in business operations, governments increasingly impose restrictions on the use, storage, and transfer of data across borders. In this paper, we examine how these data barriers can influence firms' global strategies. First, we propose a conceptual framework specifying five key dimensions of data barriers: the type of data, the data action they restrict, their source, motivation, and direction. Using an institutional perspective, we discuss how these features can influence the relative attractiveness of host countries, entry decisions, and important contingencies. We propose strategies that firms can pursue to respond to these constraints and develop a research agenda for further work in this area, thereby contributing to the literature on institutional strategy and global digital strategy.Managerial Summary Digitalization has become essential to firms' operations, yet governments increasingly impose restrictions on the unobstructed use, transfer, and storage of data. For firms that operate in different countries, adhering to these regulations requires them to understand the trade-offs involved in this process. In this paper, we explain what data barriers are and how and when these influence firms' foreign investment choices. In particular, we discuss how and when data barriers may require firms to physically locate in host countries, what the consequences are for firms' global footprint and innovation, and how they can strategically respond to mitigate the effects of data barriers.
