Longstanding debates persist about the impact of new technologies on firms, particularly as it relates to internationalization. Some scholars suggest that digitalization will enhance the benefits of export activity by facilitating connections with partners and customers. Others, however, suggest that digitalization will simply fail to live up to the hype—or perhaps even worse. This debate is especially relevant for SMEs given that export activity is the primary route to global markets for such firms. We propose that digitalization will exert dual effects on SMEs: on the “bright” side, larger investments in digital technologies will lead to greater export activity (i.e., higher export sales); on the “dark” side, however, digitalization-induced export activity will generate fewer learning opportunities from export partners (i.e., smaller productivity gains). The proposed hypotheses were tested and supported using detailed firm-level panel data from 20,133 Portuguese firms from 2010 to 2019. Additional analyses and case studies corroborate the proposed mechanisms and point to hybrid approaches as one possible way to balance these dual effects of digitalization. Taken together, the findings shed new light on the debate about the role of digitalization in internationalization efforts.
Recent work in international business views supply base international diversification (SBID) as an important strategy for strengthening multinational enterprises’ (MNEs’) resilience to country-level disruptions. However, it remains unclear how this resilience-oriented strategy relates to MNEs’ parallel efforts to improve supply base sustainability performance (SBSP). Drawing on transaction cost economics and the literature on supply chain governance, we argue that increasing SBID lowers MNEs’ costs of switching away from suppliers with poor sustainability performance, while simultaneously raising the costs of monitoring sustainability across heterogeneous supplier-country contexts. Together, these countervailing mechanisms suggest an inverted U-shaped relationship between SBID and SBSP. We further argue that this relationship is moderated by an MNE’s own sustainability performance, its relational embeddedness with its suppliers, and the institutional distance between its home country and supplier countries. Our analyses of 320 U.S. firms listed in the S P 500 over the period 2010–2019 support our hypotheses. Our findings highlight the tension that MNEs face in simultaneously enhancing the resilience and sustainability performance of their supply base and indicate that SBID should be optimized rather than maximized to balance these dual objectives.
Populist politicians employ rhetoric and policy actions aimed at disrupting a country’s institutional environment that undergirds private investors’ assets. In this study, I describe how governments led by populists interfere in countries’ institutional environments and how this may affect the viability of firms’ investments. I suggest that populists’ “interference capacity” to disrupt institutions may increase with weaker constraints on executive power and with more time in power, and the capacity to disrupt organizations may increase with government ownership sharing with private investors. Interference weakens the quality of institutions upon which contractual agreements are established and then enforced, increasing the likelihood that infrastructure projects (projects) will face distress or cancellation. Analyses of 2913 projects across 19 developing countries initiated between 1990 and 2018 (allowing until 2022 for distress or cancellation to occur) are largely consistent with this proposition. Projects are more likely to be distressed or canceled if located in a country with a populist-led government. This likelihood is magnified with weaker constraints on executive power and if projects share ownership with governments led by populists. This study outlines the mechanisms through which populist government interference may disrupt project success and provides supporting evidence of such populist “interference capacity”.
Governments push firms to internationalize not only through diplomacy and material incentives but also by shaping the environment in which investors, host governments, and local communities form judgments about cross-border opportunities. We conceptualize this process as government-pushed internationalization and examine how, in the Brazilian case (2003–2015), historical narratives became a central instrument for pursuing such strategies—and ultimately contributed to their failure. Drawing on a longitudinal historical case study of ProSAVANA, a flagship Brazilian agricultural cooperation scheme in Mozambique that eventually collapsed, we show how government-constructed narratives initially built broad support but also generated two strategic risks for enrolled firms: backfiring, as peripheral actors mobilized counter-narratives that transformed presumed advantages into liabilities, and blinding, a previously unidentified mechanism whereby reliance on historical narratives led policymakers to overlook institutional differences, alternative collective memories, and mounting risks. We reveal internationalization as a multi-stakeholder process in which diverse actors may contest official narratives and reframe opportunities as threats, thereby shaping the success or failure of government-pushed internationalization. We advance international business research by showing how governments use rhetorical history to enroll diverse stakeholders while explaining the risks such strategies create and why presumed historical advantages may ultimately become liabilities.
Acculturation is a critical yet insufficiently theorized process underlying expatriates’ and migrants’ cross-cultural adjustment. A central assumption in acculturation research is that adjustment depends on the fit between individuals and their environment, yet the concept of fit and its temporal development remain underdeveloped. We develop a dynamic conceptual model of acculturation by integrating person–environment (P–E) fit theory with acculturation research, and conceptualize acculturation as a continuous interaction between individuals’ abilities and needs, environmental demands and supplies, and cultural value congruence. We theorize two forms of acculturation fit, expected–performed (demands–abilities) and preferred–enabled (needs–supplies), that jointly shape cross-cultural adjustment and acculturative stress. The model unfolds in three phases: initial acculturation conditions defined by P–E fit and value congruence; stress-triggered fit adaptation; and longer-term value alignment. Within this framework, acculturative stress is reconceptualized as a conditional motivational force that can drive adaptive or maladaptive responses depending on value congruence. We further introduce structural (over- vs. under-misfit) and temporal (short- vs. long-term) asymmetries to explain how misfit conditions generate immediate behavioral adaptation and longer-term value change. The framework offers greater theoretical precision for understanding acculturation dynamics and provides actionable insights for managing globally mobile professionals in international business.
This article examines whether circular economy (CE) strategies enhance firm resilience after systemic shocks. Building on the natural resource-based view, we argue that CE investments made before COVID-19 can strengthen resilience by converting sustainability-oriented capabilities into absorptive and adaptive capabilities. Yet this conversion is not automatic: it depends on firms’ ability to manage three tensions between efficiency and redundancy, continuity and reconfiguration, and strategic flexibility and coordinated commitment. We test these arguments using survey data on Italian firms matched with administrative financial records and estimate ordered probit models of post-shock recovery. The results show that pre-pandemic CE investments are positively associated with firm resilience. This relationship is strongest among multinational enterprises, weaker among other firms engaged in international activities, and not statistically significant among domestic firms. We also find that upstream CE strategies are more strongly associated with resilience than downstream strategies, particularly for multinational enterprises. Overall, the findings suggest that CE contributes to resilience when firms possess the organizational and international capabilities needed to govern, integrate, and reconfigure circular practices under disruption.
Geopolitical conflicts can abruptly and significantly change the institutional conditions of multinational corporations (MNCs). Yet, the impact of such institutional friction on foreign divestment is not yet well understood. While prior research has conceptualized institutional friction as a dynamic alternative to static measures of institutional distance, its implications for firm behavior remain underexplored. We develop and test a model of institutional friction that captures how structural (political affinity), situational (military threat and regulatory responses), and operational (institutional embeddedness) friction jointly influence foreign divestment decisions, using the case of the Russian invasion of Ukraine. Based on data from 864 MNCs operating in Russia, we find that institutional friction arising from political affinity and military threat, combined with firms’ institutional embeddedness, significantly affects exit decisions. In contrast, economic sanctions imposed by Western countries have no direct effect on MNCs’ exit decisions but become consequential through their interaction with other dimensions of institutional friction, amplifying the effects of political affinity and military threat. These findings advance international business research by providing a structured and empirically grounded framework for analyzing how geopolitical conflicts affect strategic responses of MNCs. Specifically, we demonstrate how structural, situational, and operational frictions shape MNCs’ market exit decisions.
Rising geopolitical tensions and concomitant sanctions significantly affect multinational enterprises’ (MNEs), yet the theory of MNEs’ strategic responses remains underdeveloped. Through a qualitative study using the Russia–Ukraine conflict as a natural experiment, we investigate how and why MNEs respond strategically to these complex conditions. MNEs recognize that these stigmatize the MNE subsidiary’s host country. Continued association with a stigmatized location leads to cross-border stigma translation risk that threatens the MNE’s network resources and non-location-bound firm-specific advantages (FSAs). While some MNEs divest to prevent cross-border stigma translation risk from tainting such resources and FSAs, others freeze operations or stay. Those who freeze operations mitigate cross-border stigma translation risk while preserving subsidiary resources to generate potential non-location-bound FSAs, labeled subsidiary-generated FSAs (SG-FSAs). We uncover two novel mechanisms enabling MNEs to stay while mitigating stigma risk: ‘downgrading non-location-bound FSAs’ achieved through resource transfer, isolation, and recombination processes, and ‘downgrading non-location-bound SG-FSA exploitation’ achieved by embedding SG-FSAs in products restricted to the host country. We develop a theoretical model of MNE responses to sanctions, explaining how MNEs manage cross-border stigma translation risks and why MNE strategic configurations drive MNE responses. Our study contributes to understanding how and why MNEs respond to sanctions from geopolitical tensions.
This study develops an attention-based view of cross-border crowdfunding by examining how informational cues in campaign narratives guide backers’ attention and funding decisions. Crowdfunding enables global reach but intensifies competition for limited backer attention. Extending the attention-based view from managerial attention in organizational settings to crowd attention on digital platforms, we conceptualize crowd attention as decentralized and stimulus-driven. We identify two key informational cues as attention stimuli: global narrative (universal relevance) and backer-country focus (localized engagement). We argue that these cues increase support for international campaigns but that their effects depend on campaign characteristics such as cultural orientation and market readiness, which align with different backer motives. We further propose that cultural differences amplify, rather than hinder, backers’ responsiveness to attention stimuli. Using large-scale Kickstarter data, we find support for our arguments and demonstrate how digital narratives shape attention and funding decisions in cross-border exchanges.
Media has emerged as a powerful yet under-theorized force shaping the nonmarket environments of multinationals (MNEs), particularly amid intensifying geopolitical tensions and ideological polarization. Drawing on mass communication theory, we conceptualize media, encompassing both institutional news media and social media platforms, as a distinct nonmarket influencer that actively constructs legitimacy, propagates geopolitical narratives, and accelerates public sentiment across borders. We develop a framework that explicates the pathways through which media reconfigures nonmarket influences facing MNEs, including legitimacy arbitration, geopolitical narrative, sentiment cascades, and shaping liabilities of foreignness and origin across interconnected home, host, and global arenas. We advance media literacy as a form of corporate soft power that enables MNEs to sense media-driven threats, seize narrative opportunities, and reconfigure communication structures as part of an integrated nonmarket strategy and corporate diplomacy. By repositioning media as a constitutive force rather than a peripheral communication channel, we present a foundation for understanding how MNEs develop their capacity to anticipate media-driven risks, manage legitimacy across borders, and adapt nonmarket strategies under geopolitical and ideological uncertainty.
Countries with populist governments are less attractive investment destinations for Multinational Corporations (MNCs), as foreign firms tend to be delegitimized and targeted as members of the outgroup. However, populist governments vary in the extent to which they delegitimize foreign firms as outsiders. Departing from the traditional right–left classification that masks key differences among political regimes, this paper investigates aspects central to populism and to how populist governments see foreign firms: business orientation and stance on immigration. Pro-business regimes perceive a greater role for private sector firms and are less likely to treat MNCs as members of the outgroup. However, regimes with a strong anti-immigration stance highlight threats to local identity and are more likely to treat MNCs as members of the outgroup. Using a dataset of over 23,000 foreign direct investments (FDI) across 61 host countries from 2008 to 2017, we find that the adverse effect of populism on FDI is diminished in pro-business regimes whereas it is amplified in regimes with strong anti-immigration stances. Furthermore, regime alignment between home and host countries reduces the negative impact of populist governments on FDI. Our research highlights the crucial role of regime characteristics in shaping FDI across populist governments.
While prior research in the exporting literature has examined how governments use export support programs (ESPs) to strengthen small and medium enterprises’ (SMEs’) learning and linkage mechanisms for export competitiveness, the role of a newly emerging type of ESP—focused on enhancing production capabilities—remains underexplored. Drawing on compositional logic and the Leverage–Linkage–Learning (LLL) internationalization framework, this study conceptualizes a newly emerging Common Facility Center (CFC)-based ESP that aims to enhance production capabilities as a leverage-oriented type, while classifying traditional programs as learning- and linkage-oriented ESPs. Given that ESPs are more salient in emerging markets, we examine both the direct effects of CFC-based ESPs and their synergistic impact when combined with traditional ESPs on SME export performance using a matched dataset of 150 Pakistani SMEs from 2019 to 2022. This study finds that participation in CFCs not only directly enhances firms’ exports but also amplifies the effectiveness of leverage- and learning-oriented programs particularly in the emerging market context. Moreover, the synergistic effects of combining CFC-based and traditional ESPs are further strengthened by an SME’s absorptive capacity, highlighting the role of internal capabilities in maximizing external support benefits. By pioneering the investigation of production capability-focused CFCs as leverage-oriented ESPs, this study extends the SME internationalization literature by offering practical insights for policymakers and managers in emerging markets on integrating government support with firm-level capabilities to achieve superior export outcomes.
History is not merely prologue to International Business (IB) research—it is a constitutive element of how we understand multinational enterprises, foreign market entry, institutional change, and cross-border value creation. Despite increased recognition of interdisciplinary collaboration, IB scholars remain unclear about how to rigorously integrate historical methods and insights from Business History. In this special issue introduction, we address the impediments to closer interdisciplinary collaboration between the two disciplines. We identify three critical points of clarification: temporal distance, archival sources, and historical contextualization. We propose integrative research designs that embed historical analysis directly into IB theorizing. Such research designs enable IB scholars to address causal questions, explore legacy effects, and develop time and context-sensitive theories. Historically-contextualized IB research can explain why standardized theories fail in specific contexts, reveal path-dependent sequences that quantitative snapshots miss, and develop theories that account for deep institutional and temporal variation. We establish evaluation criteria for rigorous historical research and create bridges between IB and Business History scholarship. By clarifying concepts, providing research designs, and modeling best practices, this special issue expands IB’s explanatory capacity for the time-embedded, context-sensitive phenomena that define international business.
Green governance aims to resolve environmental externalities at minimum cost. By uniting Coase's two foundational theories (Economica 4: 386–405, 1937; J Law Econ 3: 1–44, 1960) we reframe MNEs not merely as profit-seeking entities but as transnational institutions capable of internalizing environmental externalities through green innovation across borders. We show how national environmental regulation spurs subsidiary-level green patenting with profit spillovers into third-country markets, thereby yielding environmental benefits. Using data on over 1.4 million MNE-owned green patents (including 10,444 patents from 103 foreign subsidiaries of 89 MNEs, 1998–2014), we examine how host-country environmental regulatory stringency shapes subsidiary innovation. We find that a higher national mix of market-based over non-market regulatory stringency significantly increases local subsidiaries’ green patenting, and that green patenting in one jurisdiction enhances parent MNEs’ net profits in third-country markets. These effects suggest MNEs can operate as low-cost institutional engines of the Green Agenda by diffusing green innovation, complementing fragmented international governance efforts. They also imply that large economies can exercise policy leadership by prioritizing market-based regulation design that induces green innovation with cross-border benefits. Our Coasean approach to global environmental governance highlights MNEs’ promise for addressing grand challenges, particularly in extending the reach of the Green Agenda and in realizing the Sustainable Development Goals.
We seek to reconceptualize internationalization strategy by shifting focus from static, single-entry mode choices to dynamic constellations of multiple involvement modes. In an era of rapid technological change enabled by artificial intelligence, blockchain, and robotics, geopolitical volatility fueled by trade wars and violent conflicts, and increasing sustainability demands, multinational corporations (MNCs) need to rethink how they are involved with diverse stakeholder expectations, prioritize flexibility and reversibility, and embed co-creation and legitimacy alongside efficiency. Extending Brouthers et al. (2022), we integrate transaction cost economics with resource-based, institutional, opportunity, and ecosystem perspectives to explain how MNCs configure and reconfigure various constellations of international involvement modes over time to address rapidly changing stakeholder expectations. We further synthesize papers in the special issue on international involvement to provide empirical and theoretical insights into complex, non-linear internationalization trajectories, framing international involvement as an adaptive, interconnected system better suited to today’s multi-objective global business environment.
How does import penetration from a foreign economy affect financial analysts’ forecast accuracy, and do cultural ties to that economy provide an informational advantage? We examine these questions using 504,491 analyst earnings forecasts for U.S. manufacturing firms from 2001 to 2024, leveraging exogenous variation in Chinese import penetration driven by productivity growth in China and its WTO accession. We find that rising Chinese import penetration significantly impairs forecast accuracy: a one-standard-deviation increase reduces accuracy by 12.1
Social media has become a strategic tool for firms worldwide to drive customer engagement (CE) and enhance business performance, yet limited research has systematically examined how social media content strategies (SMCSs) perform across cultural contexts. To address this gap, we conceptualize SMCS along three key dimensions—content characteristics, content source, and content valence—and develop a meta-analytic model grounded in signaling theory. Drawing on 148 empirical studies comprising 869 effect sizes, we examine the mediating role of CE, through which these content dimensions indirectly impact brand, product-market, and financial market performance. We also assess how national cultural values (i.e., individualism, uncertainty avoidance, power distance, masculinity, long-term orientation, and indulgence) moderate the content–engagement link. The findings reveal that CE serves as a key mechanism linking SMCSs to firm performance. Moreover, the strength and direction of these effects vary systematically across cultural values, highlighting important boundary conditions caused by national culture for social media content effectiveness. This study advances research at the intersection of social media and international business by providing a systematic cross-cultural account of how digital content strategies translate into engagement and performance outcomes.
We examine how radical industry transformations shape firms’ internationalization, addressing the limited theorization of how industry-level dynamicsinfluence internationalization processes. Drawing on a historical case study of Telecom Finland’s internationalization during two radical transformations in the European telecommunications industry (1987–1998), we show how industry transformation simultaneously orients firms toward parallel internationalization and constrains its execution through systemic industry uncertainty, leading to two contributions. First, we offer an industry-driven explanation for why firms internationalize into multiple markets in parallel. Industry transformation enables parallel entries by creating simultaneous opportunities and actively orienting firms toward parallelism, as industry conditions shape what managers interpret as viable responses. Second, we expand understanding of uncertainty in internationalization processes by introducing the concept of systemic industry uncertainty, a form of transformation-driven uncertainty originating at the industry level, shared across actors, interdependent across markets, and irreducible within the relevant decision windows. Distinct from the market-specific uncertainty emphasized in internationalization process literature, systemic industry uncertainty impedes established uncertainty-reduction mechanisms—learning, network-based knowledge, and diversification—showing that uncertainty shapes internationalization in previously unrecognized ways. Our findings suggest that managers should closely follow industry-level developments, as these play a more central role in shaping internationalization than existing models assume.
