We introduce a new way to conceptualise, assess and manage country risk. Departing from standard approaches that equate risk with expected values (e.g., lower growth implies higher risk), our approach equates risk with the variance of expectations (e.g., greater variation in expectations of growth implies higher risk). The variance-of-expectations approach is more consistent with the manner in which managers conceptualise risk as unpredictability, the chance of loss and the magnitude of loss. The approach is illustrated through the construction of country risk measures derived from cross-national survey data collected by the World Bank. Evidence suggests that the variance-of-expectations approach to country risk assessment introduces new information beyond conventional approaches and may also be more likely to help managers anticipate unfavourable changes in a country's operating environment.

Desirability, Feasibility, and Sustainability as the New Strategic Decision Imperative B. Tom Hunsaker, Douglas E. Thomas Abstract Strategic decision-makingis critical to the performance of any organization. Winston Churchill described decision making in the following way, “A (person) must answer “aye” or “no” to the great questions which are put, and by that decision (s/he) must be bound.” While organizational decisions aredifferent from the stakes Churchill faced as prime minister in a war, they are important to all organizational stakeholders. Increased competition, complex stakeholder relationships, and rising costs amidst budget challenges are just of few of the conditions that can complicate the process.This paper develops a framework for understanding the values involved in strategic decision making. Full Text: PDF DOI: 10.15640/jmise.v4n2a1

The shift away from the general focus on the importance of the CEO (Chief Executive Officer) of organizations is the basis of this paper. Their proposed new focal point of importance now lays on the Top Management Team (TMT) as the important locus of decision making, thus making this group the central focus for management analysis. The hypothesis that the firm itself (its structure and strategies) is correlated to the mindset of the TMT has been expanded to contemplate the firm’s diversification decisions and the relationship with firm’s performance. The author proposes four views of analysis to understand the relationships between the dominant logic for company management, being it international or not, and its performance.

In response to calls for greater incorporation of entrepreneurship theory into international entrepreneurship research, we theorize that alertness to international business opportunities (IBOs) will play a crucial role in international entrepreneurial activity. We predict that firms will vary in their alertness to IBOs depending on a range of firm characteristics, prior international experience and social networks. Drawing on a sample of 92 small- and medium-sized enterprises (SMEs), we find that alertness to international business opportunities is associated with firm characteristics (age, technological innovation via patents, employment growth, and entrepreneurial orientation), prior international experience (scale and breadth of foreign sales, foreign language capabilities of managers), and social networks (total network ties, range of foreign ties, range of domestic ties to international entities). The results provide evidence that the environmental complexity and uncertainty associated with international business contexts create rich opportunities to study entrepreneurial processes such as the recognition and evaluation of business opportunities. We discuss implications specifically for international entrepreneurship and for the broader relation between prior experience, social networks and entrepreneurial alertness.

Research indicates that there are two primary aims of the higher education institution: (a) scientific and scholarly inquiry, and (b) the instruction of students (Veblen, 1918). This aim has been reified consistently for nearly a century. By 2002, the pursuit of higher education had reached record levels. However, more recently, public confidence in higher education is decreasing Previous research posits that public confidence in the institution of higher education is an important component of understanding the extent to which these institutions are delivering on their core missions, and that confidence varies based on specific social and economic factors. Using logistic regression techniques with data from the General Social Survey (GSS), this study Results support previous literature in highlighting the importance of race, while downplaying the previously posited importance of respondent age. Further, this study finds that ideology represented by political party affiliation is statistically significant in predicting confidence in these institutions.

Service firms such as banks and hotels typically locate multiple foreign affiliates in the same host country. Often, these location patterns occur in waves with early movers followed by latecomers; for example, the early entries of Japanese banks into the U.S. market in the 1970s and 1980s were followed by emerging-market Asian banks in the 1990s. Using insights from the agglomeration and organizational learning literatures, we argue that local density and experiential learning affect location choices within a host country, and that these relationships differ between early movers and latecomers. We test and find support for our arguments using a sample of Asian banks in the United States over 1997–2003.

This paper describes the process of institutionalization and legitimization in countries in Latin America and its impact on organizational decision-making regarding inward foreign direct investment (FDI). It argues that institutionalization is a process that works through all three pillars—cognitive, normative, and regulative—and that this process can legitimize a host market for foreign investors. The study examines institutional reform in 16 Latin American countries using several indices of institutional change occurring between 1970 and 2000. Results indicate that institutional processes that legitimize more effectively through the cognitive and normative pillars (e.g. educational attainment, bilateral investment treaties, privatization, and political uncertainty) are better indicators of inward FDI than those that legitimize primarily through the regulative pillar (e.g. tax reform, trade reform, and financial account liberalization).

Scholars typically view offshore outsourcing as a means of reducing the cost of manufacturing activities for large corporations, yet offshore outsourcing may entail administrative and technical services, and may include activities outsourced by small and medium-sized enterprises (SMEs). Drawing on research in international entrepreneurship and services, we hypothesize and find evidence that offshore outsourcing of administrative and technical services by SMEs is associated with greater extent and scope of internationalization of sales. Offshore outsourcing enhances international competitiveness by enabling SMEs to reduce costs, expand relational ties, serve customers more effectively, free up scarce resources, and leverage capabilities of foreign partners.

This study of Latin American banks located in the United States employs a resource-based framework to explain how subunits of emerging market firms can overcome the challenges of operating in a developed market.

We analyze how competitive dynamics within the Mexican retail sector have shifted following the entrance and ascendance of Wal-Mart, and how Mexican retailers have responded individually and collectively to Wal-Mart's dominance. We discuss implications for strategic management and international business research as well as for managers of emerging market firms that face dominant foreign competitors. Within fifteen years of entering Mexico, Wal-Mart has become the dominant retailer and controls a larger market than all its rivals combined. Rival Mexican retailers have responded collectively via legal action and a purchasing cooperative as well as individually via heterogeneous individual responses, which include focusing on entering the United States market, altering positioning in the Mexican market, and identifying ways to become more competitive in terms of prices and localization of offerings. In 1991 Wal-Mart entered the Mexican retail sector. Within less than five years, the company owned a controlling stake in the country's largest retailer. Fifteen years after entering the country, Wal-Mart maintains a dominant position and single-handedly accounts for more than half of all retail sales. Wal-Mart has captured over 55% of the Mexican retail market and has become the largest private employer in the nation with 140,000 employees. The company is continuing to expand in Mexico in terms of entering both new geographic markets, particularly rural areas, as well as new product markets, such as financial services. The initial ascendance and continued dominance of Wal-Mart have altered the competitive landscape in Mexican retailing and have elicited a diverse range of responses from Mexican competitors. Certain firms (e.g., Gigante) have responded to increased domestic competition by expanding into international markets (i.e., the United States). Others have sought to change their reputation and positioning in the Mexican market. For example, Comercial Mexicana has shifted from trying to create a patriotic reputation (a very Mexican store) to focusing on being known for lower prices. Soriana, one of the oldest Mexican retail chains, has paradoxically shown great flexibility and emerged as Wal-Mart's chief competitor. Soriana has been able to localize its offerings and has also emerged as a low-price leader. In addition to these idiosyncratic individual responses, Wal-Mart's competitors have responded in the form of collective action by first taking legal action against Wal-Mart in the form of an ultimately unsuccessful antitrust lawsuit and subsequently by forming a purchasing cooperative, Sinergia. In this paper, we analyze the competitive actions of Wal-Mart and the individual and collective responses of the company's Mexican competitors. To analyze these competitive interactions, we draw on the competitive dynamics stream of research within strategic management (e.g., Grimm & Smith, 1997; Smith, Ferrier & Ndofor, 2001; Ketchen, Snow & Hoover, 2004). We show how competitive dynamics have evolved in the Mexican retail industry following the entrance and dominance of Wal-Mart. We conclude with a discussion of the implications for both theory and practice. 1. Competitive Dynamics between Dominant Multinationals and Emerging Market Firms Emerging economies are generally characterized by a rapid pace of economic growth, increasing liberalization of trade and investment regimes, and economic restructuring (Hoskisson et al, 2000). Mexico, for instance, maintained high trade barriers and imposed strict limitations on foreign investment through the mid-1980s. From the point at which Mexico joined the General Agreement on Tariffs and Trade in 1986 through the implementation of the North American Free Trade Agreement with Canada and the United States in 1994 and a broad range of similar agreements with other countries, Mexican firms became increasingly exposed to competitive pressures from foreign firms in the form of imported products as well as foreign-owned operations in Mexico. …

We draw on entrepreneurship research to present a framework for international new ventures as the cross-border nexus of individuals and opportunities. Opportunities may be associated with cross-border combinations of resources and/or markets and therefore vary along these two dimensions. This framework accounts for the emergence of firms whose very existence stems from opportunities to engage in the cross-border combination of resources and/or markets. This perspective has important implications for whether internationalization follows competitive advantage or vice versa and also helps explain how the identification and exploitation of opportunities to create international new ventures may contribute to economic development.

This paper draws on organizational learning theory to explain how experience influences the propensity for emerging market firms (using an event history analysis of a sample of Latin American firms during the 1990s) to enter developed markets, and their likelihood of survival.

This paper explores overlap between two similar constructs, reputation and legitimacy, and their effect on organizational performance. Firms face pressures to both develop reputations based on differentiation and to achieve isomorphism by attaining legitimacy. In this paper, we discuss how an organization's ability to balance these two pressures is related to its performance. Further, we discuss how these constructs are created at multiple levels (e.g., individual). Introduction The construct of reputation is central to many branches of social sciences including economics (Shapiro, 1983), sociology (Podolny, 1993), and organizational sciences (Weigelt & Camerer, 1988). In field of management, various theories include reputation to explain organizational outcomes including resource-based view (Barney, 1991), transaction cost economics (Hill, 1990), and game theory (Weigelt & Camerer, 1988). Reputations have also been studied at individual level to explain intra-organizational outcomes (Kilduff & Krackhardt, 1994). Despite fact that organizational reputation is central to study of organizations, reputation is often interchanged for related constructs. For example, related constructs such as image, identity, status and legitimacy are used throughout literature; however, they mean different things depending on author (Dutton & Dukerich, 1991; Gatewood, Gowan, & Lautenschlager, 1993). The two constructs of legitimacy and reputation have been confused and used interchangeably (Rao, 1994). This leads to confusion for readers and impedes progress in accumulation of knowledge on this important subject. For purposes of this paper, a corporate or organizational reputation is a set of attributes ascribed [socially constructed] to a firm, inferred from firm's past actions (Weigelt & Camerer, 1988:443). Legitimacy is defined in this paper as 1. the normative justification of and 2. the cognitive validation of an entity as desirable, proper and appropriate in a widely shared system of beliefs and norms (Rao, 1994:441). Reputation and legitimacy overlap but result from different pressures that organizations face: pressures to be different and pressures to be same. Research on organizational legitimacy indicates that it is ascribed based on factors at different levels including organization itself and its institutional environment (Kostova & Zaheer, 1999). Research on organizational reputation has not yet focused on multi-level sources of organizational reputation. We attempt to clarify this issue by explaining how organizational reputation is constructed by external actors based on factors at several different levels: individuals, products and capabilities within organization, organization itself, and its institutional environment. Thus, this paper contributes to literature on organizations and organizational reputation in several different ways. First, it provides a clarifying review of reputation and similar and related constructs, including legitimacy. second, it explains how reputation and legitimacy result from different pressures. Finally, this paper explains how external actors construct organizational reputations based on factors at different levels both internal and external to organization. Organizations: Homogeneity or Heterogeneity? One of most salient organizational outcomes to researchers is organizational performance. However, performance is understood in different ways in different theories. For example, resource-based view is generally concerned with understanding differences in performance across organizations while institutional theory is concerned with organizational survival. The theories also differ as to what factors give rise to organizational performance. For example, several relevant theories argue that relative homogeneity across organizations is important for organizational performance; others argue that differentiation across organizations will be positively associated with success. …

This chapter explores the approaches to corporate citizenship and corporate social responsibility (csr) of large firms headquartered in Mexico. Corporate citizenship is rapidly becoming a popular expectation around the globe—including in Central and South America, as documented in this focused issue. Case studies of Mexican firms that are recognised as having exemplary csr practices provide a more accurate view of how csr is understood within Mexican firms and the distinctive forms that csr takes in Mexico. Mexico's cultural and institutional history is rooted in its colonial past, reflecting a mistrust of power and institutions while also placing particular emphasis on the public interest-serving roles of private-sector businesses. Since the 1980s, Mexico has aggressively entered the global economy, both by opening its borders to foreign trade and investment and by stimulating the growth of the Mexican private sector, especially through privatisation of state-owned enterprises.

This study examines the relationship between international diversification strategies and performance in emerging market firms. Using a longitudinal sample of Mexican firms, it finds that there is a U-shaped curvilinear relationship between international diversification and firm performance. Mexican firms initially experience negative performance as they expand internationally due to the liability of foreignness; however, over time, through gaining experience and through organizational learning, they eventually reap the positive benefits from international expansion. Contrary to expectations, our study finds no support for geographic distance as a moderator of the international diversification–performance relationship. Managers of emerging market firms should exercise patience as they initially face challenges to international expansion and should consider expanding to a diverse set of destinations, including those that are more distant.

This paper examines both the imports and exports of non-maquiladora Mexican firms, theorizing that importing is generally motivated by exploration for new resources and exporting by exploitation of existing resources. Our results indicate that firm size is positively related to both imports and exports, while low cost labor advantage is positively associated with exports but not significantly related to imports. Because importing may precede exporting, it should be considered as part of the internationalization process of firms and as a key way to acquire resources before exploiting them through exporting.