Purpose – The purpose of this paper is to explore the viability of shifting foreign direct investment (FDI) from China to Central and Eastern European (CEE) countries in light of recent geopolitical and economic challenges. By analyzing case studies, it argues that CEE nations offer a compelling alternative for Western European businesses, with stronger intellectual property protection, political stability and alignment with European Union (EU) sustainability goals. The paper provides insights for firms and policymakers on mitigating risks and enhancing business operations by pivoting toward the CEE region, offering practical recommendations for adapting to shifting global trade dynamics. Design/methodology/approach – The design methodology uses the case study approach to analyze the shift of FDI from China to CEE. This method examines the geopolitical, economic and legal contexts influencing business decisions, using real-world examples of Western European companies that have made this transition. The case studies highlight key factors in decision-making and the benefits of relocating investments to the CEE region. Findings – The study identifies several advantages of the CEE region over China for Western European firms. These include geographic proximity, similarities in business values and purposes, environmental accountability, trustworthiness in business, enforceable noncompetition rules, lower risks of counterfeiting, reduced political and administrative risks, lower risks of intellectual property theft and reduced risks of negative publicity. Practical implications – The findings suggest that Western European firms should consider redirecting their FDI to the CEE region to mitigate risks associated with investing in China. This move could offer long-term benefits despite short-term complications. Originality/value – This paper contributes to the FDI theoretical framework by enhancing the cultural, administrative, geographic and economic (CAGE) distance framework. It provides a unique perspective on the shifting dynamics between Europe and China and highlights the potential of the CEE region as a viable alternative for FDI.

Prior research shows that using mimetic isomorphism to select price/quality product strategies results in superior performance in the United States, the European Union, and Japan for both developed economy and emerging market manufacturers. However, do these results generalize in the case of emerging market service providers? Due to the nature of services, customers cannot gauge service quality prior to consumption, and they must rely on other cues; commonly, consumers rely on the brand name as a proxy. We theorize that for emerging market service providers, choosing a strategy of “distinctiveness” (pursuing a nondominant price/quality strategy) offers a way to differentiate their offering from the mimetic choice, resulting in superior performance. Implications for theory and practice are discussed.

Purpose This paper aims to apply a risk/uncertainty lens to corruption to explore how different types of corruption (formal vs informal) in a multinational enterprise’s (MNE) operating environment have different relationships to firm performance. Design/methodology/approach This paper uses a portfolio approach to measure the formal and informal corruption impacts of an MNE’s entire set of operating locations and test the hypotheses using both accounting- and market-based measures of performance on a sample of 648 firms. Findings This study hypothesizes and finds that because formal corruption represents risk, it is typically included in the a priori evaluations of trade-offs between market attractiveness and costs made by MNEs prior to market entry, higher formal corruption in the firm’s environment is positively related to its financial performance. Conversely, the uncertainty associated with the generally intangible and pervasive nature of informal corruption prevents similar, accurate cost consideration before entering the market, resulting in a negative relationship between higher levels of informal corruption and firm performance. Originality/value This study provides unique empirical support for the notion that MNEs can both gain and lose by investing in corrupt institutional environments, grounded in an understanding of the differences between risk and uncertainty, reinforcing the importance of considering the potential impacts of both the formal and informal dimensions of corruption in a firm’s operating environment.

In the late 1980s, Central and Eastern European nations (CEE) rejected communism and embarked on a journey towards free-market democracy. As part of this transformation, the Romanian economy transitioned from communism to capitalism. The purpose for our paper is to suggest insight from the Romanian experience that may be useful for nations in Asia, Africa, Middle East or South America that maybe be undergoing a similar transition. The main results of our paper is to substantiate the precepts of institutional theory, that a system is best transformed through external, international pressures. Our contribution illustrates this transformation through the case studies of Romtelecom, Dacia, and Petrom, Romanian state-owned enterprises (SOE) privatized by foreign multinational corporation (MNC). We distinguish between formal and informal institutions with the latter tending to be overlooked by traditional researchers. Through these longitudinal surveys we argue that multinational corporations are possibly the best generators of informal institutions.

SUMMARY In order to take advantage of the emerging global economy and reap potential gains in local employment levels and tax revenues, city leaders must decide whether to put scarce resources in export development, foreign direct investment attraction, or both. In this study we examine the effectiveness of policies used by cities in their efforts to promote exports. We find: (1) cities prefer to pursue FDI attraction activities, and (2) there is a negative relationship between the level of city sponsored international activities and city levels of exports.

Previous research shows the direct selling system helping BOP populations in South Africa. We seek to extend this by examining if countries typified by large “base-of-the-pyramid” (BOP) are fertile ground for direct selling? Can direct sellers do well by doing good for BOP populations and the environment? Using data from a sample of 51 developed and developing countries representing over 90% of world GDP, we found that direct selling market penetration is positively related to gender inequality, income inequality, and less financial freedom. Implications for MNEs, as well as national and policy makers in subsistence markets are discussed.

Understanding the antecedents to, and consequences of, a firm’s degree of internationalization is integral to international business research. In order to be accepted by scholars, empirical research that tests hypotheses regarding drivers and/or consequences of firm internationalization needs to use a valid measure of firm internationalization. In this paper, we develop a new measure, the ratio of international market shares (RIMS); RIMS measures a firm’s degree of conformance to the theoretically grounded characteristics of a maximally internationalized global firm. RIMS is theoretically and empirically compared to three widely used measures of firm internationalization: foreign sales to total sales (FSTS), international diversification, and international scope. Each of the three is shown to have serious limitations while RIMS does not. In addition to being theoretically based, RIMS also has the advantages that it: measures the degree to which a firm has penetrated the rest of the world’s market relative to the degree it has penetrated its primary market; captures the combined effects of the breadth and average depth of internationalization; is easy to calculate; is easy to interpret, and is calculable for more firms than measures of diversification or FSTS. All four measures are tested on a sample of large manufacturing firms.

Can host country selection affect the corporate social performance (CSP) of multinational enterprises (MNEs)? Using institutional distance as our theoretical lens, we propose and empirically examine the notion that greater institutional diversity can have disparate influences on the social performance of different types of MNEs. We conceptualize each MNE as a unique portfolio of locations and use that “footprint” to examine the impact of formal and informal institutional distances on CSP. We hypothesize and find (1) a moderating influence of greater formal institutional distance in the MNE portfolio that slows the rate of increased benefits associated with greater international scope; and (2) a direct influence of greater informal institutional distance that lowers the overall levels of CSP independent of the international scope of the MNE. Managerial implications for international location selection are discussed.

Existing theories of diversity typically focus on a limited range of usually American research settings and on a relatively narrow range of types of diversity. Here, we examine a less commonly used measure of diversity, top management team (TMT) functional diversity, for a sample of non-US multinational enterprises (MNEs) from a cross-cultural perspective. We theorize and empirically test the notion that the individualism–collectivism dimension of national culture moderates the relationship between TMT diversity (measured by functional heterogeneity) and firm performance such that greater functional diversity among TMTs in collectivistic national cultures improves firm performance, while greater functional diversity among TMTs in individualistic national cultures weakens MNE performance. Our empirical results based on a sample of MNEs from 25 countries support our hypotheses. The relationship between TMT functional heterogeneity and firm performance is strongly negative in highly individualistic national cultures but positive in collectivistic national cultures. Managerial implications, limitations, and future research directions are discussed.

Selecting appropriate samples in cultural distance research is vital to producing valid empirical results. Over 80% of empirical cultural distance studies use a sample comprised of either a single home country with varying host countries or a single host country with varying home countries. When difference scores are used in the calculation of cultural distance based on single-country samples the resulting cultural distance measures typically are highly correlated with one or more of the varying countries’ underlying national culture dimensions, making it impossible to determine whether findings are due to cultural distance or to varying countries’ national culture effects. This is referred to as a confounded variables problem and means that for an overwhelming number of cultural distance studies, we cannot with certainty have confidence in the verity of their findings. To resolve this uncertainty we propose that cultural distance scholars select samples comprised of at least two home/host countries. We empirically demonstrate that two-country samples where most of the national culture dimensions for the two countries differ create certitude with respect to results, eliminating the cultural distance confounded variables problem. We describe the single-country sample problem, illustrate the proposed a priori two-country solution, and suggest avenues for future research.

Previous research on international market selection (IMS) typically is a-theoretical in nature and primarily focuses on a few, mostly developed countries. Here, we address both issues by (1) using factor endowment theory to predict IMS choices for the direct selling industry and (2) for a sample that includes 51 developed and developing countries representing 91% of total global GDP. Results indicate that the direct selling industry thrives in international markets with greater income inequality, greater female income inequality, less financial freedom, and access to the Internet. Implications of our study are discussed.

Purpose– The purpose of this paper is to use a theoretical framework (institutional theory) to predict international market selection (IMS) for the direct selling industry.Design/methodology/approach– The authors use independent variables taken from institutional theory to predict IMS for the direct selling industry, allowing the authors to show the relationship between institutional theory – defined independent variables and the relative attractiveness of international markets. The model is applied to a broad sample of 51 developed and emerging nations that comprise 91 percent of worldwide GDP.Findings– The authors found that the hypotheses were confirmed. Institutional theory – defined independent variables did a good job of predicting the relative attractiveness of international markets.Research limitations/implications– The authors used cross sectional country level data to validate their model. One major implication: institutional theory appears to do an excellent job of predicting IMS in contrast to geographic proximity or cultural similarity for the direct selling industry.Practical implications– Managers should consider formal and informal aspects of the institutional environment, when selecting new international markets.Originality/Value– In contrast to most IMS papers, the authors apply a theory to predict IMS outcomes, helping to provide greater potential generalizability. The authors show that selected dimensions of institutional theory do a good job of predicting IMS for the direct selling industry. Future efforts may wish to apply institutional theory to new IMS contexts. The authors conclude with managerial implications.

Using an institutional theory framework we theorize, hypothesize, and empirically show that higher levels of formal and informal corruption environments found in a firm's operating portfolio are related to higher levels of corporate social irresponsibility (CSiR). Failing to consider corruption's informal dimension leads to potentially false perceptions about a multinational enterprise's (MNE) operating environment, particularly when the formal dimension is low but the informal corruption dimension is high, as is the case in about one third of our sample. Including the informal corruption environment component provides additional explanatory power over the formal corruption environment alone in predicting CSiR and yields a superior understanding of both the formal and informal dimensions of the corruption institutional environment's influence on corporate social irresponsibility levels of MNEs. Managerial implications and future research directions are discussed.

Has the relationship between the dominant investment motives of multinational enterprises (MNEs) and national trade balances, imports, and exports changed over time? A 1996 study hypothesized and found that the MNE market versus resource seeking investment motives in developed countries (DCs) resulted in different aggregate impacts on national trade balances, imports, and exports. In this study, we ask whether the increased use of intermediary products, a major change in the way MNEs conduct business, affect the previously found patterns. Because firm‐level data on intermediary products is not widely available across countries, we indirectly test their impact, hypothesizing that the rise in use of intermediary products has changed MNE investment motives in DCs, resulting in stronger relationships between foreign direct investment (FDI) and imports/exports in high‐FDI DCs but weaker links between FDI and national trade balances. Implications and future research directions are discussed. © 2015 Wiley Periodicals, Inc.

Although scholarly research has provided some linkage between strategy and international marketing, it has for the most part remained very broad in scope and therefore has provided little specific guidance for the international marketing manager. Until recently very little research has developed propositions linking specific

Prior studies compare keiretsu member firm and independent firm performance. Here, we use historical and power dependence perspectives to theorize that the Japanese keiretsu system primarily benefits the most central firms. We test this by examining the performance of two types of keiretsu firms (central firms and other member firms) within two types of keiretsu (horizontal and vertical). We hypothesize and find that: (1) central vertical keiretsu firms are more profitable than central horizontal keiretsu firms; (2) central horizontal keiretsu firms have greater profit stability than central vertical keiretsu firms; (3) central vertical keiretsu firms are more profitable than non-central vertical keiretsu firms; and (4) central horizontal keiretsu firms have greater profit stability than non-central horizontal keiretsu firms. Implications for managers and future research directions are discussed.

International entrepreneurship research maintains that firms with strong entrepreneurial orientations expand to international markets to enhance performance. Yet these firms can suffer from resource constraints as they move abroad. To alleviate this problem some research suggests they should participate in strategic alliances. We develop and test a theoretical perspective that combines these ideas, noting that participation in research or marketing alliances in foreign markets helps improve international performance both directly and by enhancing the application of entrepreneurial orientation in the foreign market. Based on a survey of SMEs from the US and UK, our findings indicate that firms that participate in research or marketing alliances in foreign markets tend to have higher international performance. Our analysis also shows that participating in research or marketing alliances positively moderates the relation between entrepreneurial orientation and international performance. These results have important implications for managers and policy makers interested in improving the international performance of firms.