Purpose– This study aims to examine the factors affecting the foreign direct investment (FDI) and foreign portfolio investment (FPI) flows among the 16 economies comprising the Middle East and North African (MENA) region.Design/methodology/approach– Panel data for the period 1984-2012 are used, and the generalized method of moment (GMM) technique is implemented.Findings– The results support the agglomeration effect, which indicates that countries which have already had FDI attract more FDI in the future. Economic risk affects FDI significantly and negatively, whereas trade openness has a significant and positive impact on FDI. Of the political risk factors considered, three of them, namely, law and order, ethnic tension and internal conflict, significantly affect FDI. The results on FPI show that the lag in FPI and the degree of openness play a significant role in attracting FPI into the MENA region. In addition, stock market capitalization, as well as the return on investment affects the FPI flow positively. The study also reveals a negative government structure impact on FPI, whereas, surprisingly, religious tension in the MENA region affects FPI positively.Originality/value– This research examines, simultaneously, the factors that determine not only FDI but also FPI flow. It uses a powerful econometric technique which avoids common estimation problems such as endogeneity, heteroskedasticity and autocorrelation. Policymakers in the MENA region recognized the need for outside capital as a major catalyst of development, economic growth and modernization. Therefore, it is essential to know the factors that would lead to a surge in capital flow to these countries.
Purpose– The purpose of this study is to examine the nature of regional macroeconomic risk by examining the trade networks formed by regional multinational enterprise (MNE) activity at the aggregate level, and exploring the subsequent implications on the vulnerability of those networks to economic shocks.Design/methodology/approach– The study draws on contemporary developments in graph theory to revisit the nature and dynamics of complex trade networks in the Southeast Asian region from 1990 to 2012.Findings– Findings indicate that the topology of the regional trade network has changed significantly in the period examined, in that it has become denser, more connected and more clustered. Analysis further indicates that disruptions to the trade network during periods of shock have exhibited decreasing levels of magnitude, pointing to greater robustness over time.Research limitations/implications– The results show that intra-regional MNE activity has the effect of reducing risk in the region. If MNEs aim to reduce their risk exposure, they must first deepen their commitment to the regional market.Originality/value– This paper enriches current understanding of the changing nature of regional risk, and represents one of the first efforts to examine international trade networks in light of recent developments in the understanding of networks beyond the conventional random graph.
Purpose– The purpose of this paper is to examine the inter-firm variation in the opening of international global development centers (GDCs), in a high commitment entry mode, by Indian software firms as a function of their past performance, degree of internationalization, possession of a valuable resource in the form of CMMI Level 5 certification and rivals’ establishment of GDCs.Design/methodology/approach– The authors draw on the organizational learning theory, the resource-based view and the strategic behavior theory to analyze the variation in the number of GDCs opened by 32 leading Indian software firms between 2000 and 2009.Findings– The authors find that strong past performance of Indian software firms leads to the establishment of a greater number of GDCs. The authors further demonstrate that non-financial resources, such as the possession of CMMI Level 5 certification, positively moderate the above relationship.Research limitations/implications– The research is conducted in the context of a single industry and a single home country. The authors also focus on a subset of firms (large, listed firms) in the industry. The authors recommend future research to examine other knowledge-intensive industries.Practical implications– An increasing number of Indian software firms and other emerging market firms wish to locate close to their overseas customers by choosing a high commitment entry mode. The research suggests that, prior to internationalizing, managers should build up critical and relevant resources through deployment of high commitment entry modes.Originality/value– The research has many unique aspects including a rigorous model development, a robust empirical approach as well as an interesting empirical context. The authors believe that the results will be useful to academics and practitioners alike.
Purpose– This paper presents a framework for an improved understanding of actual internationalization motives. Answers to a key question in IB studies – why companies internationalize – contain considerable flaws. There are theoretical, disciplinary and methodological reasons for this state of affairs. In practice, the lacking attention for motivational constellations has serious repercussions for the theoretical sophistication of IB studies, lowering its managerial relevance.Design/methodology/approach– Managers are confronted with many internationalization considerations simultaneously and, therefore, often have difficulty in recognizing themselves in extant approaches. The abstractions that many textbooks and academic papers present on the why question of corporate internationalization defy reality in case the various motivational trade-offs that managers face are not adequately addressed. This contribution presents a framework that is based on the identification of a number of motivational tensions that define the outcome of the actual internationalization strategies of companies: between intrinsic and extrinsic motives, between strategic intent and realization and between tactical and strategic considerations.Findings– Dealing with these tensions at the same time provides a strong ground for explaining particular outcomes of the internationalization process in degrees of international coordination and integration.Practical implications– The practical implication of the approach is a new conceptual framework that help scholars and managers understand complex configurations of internationalization motives better and thus come up with more realistic descriptions of what has actually influenced companies to adopt a particular internationalization strategy.Originality/value– The paper presents a completely new combination of models to document the motivations and consequently the internationalization trajectories of companies. It is, however, also well founded in the literature, but it presents a fundamental account of some serious flaws in IB theory and practice.
Purpose – The purpose of this paper is to show how the nature of the activities conducted by multinational enterprises globally and the governance modes are changing. Essentially, multinational enterprises (MNEs) structure and organize their activities in a more complex, fragmented and geographically dispersed manner. In this paper, the authors suggest that the evolution of MNEs and the rising importance of global value chains (GVCs) require a refinement of FDI motivations rather than a drastic change in the existing categories. The authors begin with a historical overview of evolving firms’ international strategies and FDI motivations, before developing arguments to support the view that the fine slicing of economic activities on a global scale, and the combination of governance modalities ought to be integrated into the presentation of investment motivations. The discussion ends with implications for governments and policymaking. Design/methodology/approach – This paper is a conceptual paper. Findings – Key suggestions to refine the presentation of investment motivations are presented, together with policy recommendations. Originality/value – This paper provides a novel approach to ways of refining investment motivations by integrating GVC considerations, and drawing policy implications from this process.
