Location influence

Question 1

Mention as many characteristics of a SOE as possible

Answer 1

> 10% owned by Gov.; control; availability of assets; societal objectives; Soaks up capital and talent; overcomes institutional voids, political interference; historical

Question 2

How does SOE-/SO-MNE behavior differ from MNC behavior

Answer 2

Why invest? MNC wants the internalize the comparative advantages, the SEO has political objectives.

Where? MNC goes where resources and capabilities are applicable to achieve higher profitability. SOE goes where the government wants influence/diplomacy

How to invest? MNC entry mode that reduce risk/commitment. SOE idc just get me what i want

Question 3

Explain what you know about North (1990,1991) perspective on institutional economics (mention 4 mechanisms as well)

Answer 3

North talks about the governmentally regulated set up as a country, and how it affects strategy. He discusses informal and formal in relation to the following mechanisms.

1) Transaction costs
2) Agency costs
3) governance structures
4) political hazards

Question 4

Institutions: comparative capitalism

Answer 4

In short, how much the government influence company and industries /environment. E.g., is the country able to attract FDI? Liberal (small state) = little influence on strategy. influence of unions. How state driven are they?

Question 5

What 6 levels of institutions are there?

Answer 5

World (WTO, IMF); Regional (EU); Country/societal (Government); Industry (NAFTA), Organizational (America example), deparment (manager)

OBS: EU is not the institution, they create an institution

Question 6

What is a formal institution

Answer 6

National laws, business policies, governmental regulations

Question 7

What is a informal insitution

Answer 7

Sanctions, taboos, customer, traditions, and code of conducts

Question 8

Institutional-based view

Answer 8

How the environment impacts firm strategy in 3: Distance, Voids, Transition/Change

Question 9

What are institutional voids

Answer 9

Environments in which institutions are not working well or are completely absent.
(e.g. IP protection could be present but not reinforced)

Question 10

What are some main conclusions/advice we drew for the discussion on institutional voids?

Answer 10

1) You don’t want to internationalize into risky environments w high institutional voids.
2) Don’t go where association can hurt your image.
3) Don’t go where there is no governmental support

Question 11

What does institutional pressure by local governments consider. Why is it important?

Answer 11

basic answer would be economic/state interventionism. Based on the type of capitalism ranging from liberal to state-led capitalism.

Importance: impacts strategy

Question 12

How does institutional change/transition impact businesses

Answer 12

e.g. once IP protection was established there were a massive increase in innovation inflow

Question 13

What 5 institutional dimenstions exist (“markets”)

Answer 13

Capital (equity/bank?).
Labor (schools).
Product (regulations).
Governmental regulation (low/high; corruption?). Contract enforcement (yes/no)

Question 14

institutional environment: Adaptability and strategic 4 choices.

Answer 14

Political, economic and social.
1. Replicate/adapt model
2. Compete alone/collaborate to navi institutional voids
3. accept/change contezt: ok or fill voids
4. enter, wait, exit

Question 15

MNC adaptability: political/social. Why, how, cons.

Answer 15

Require dynamic capability.

how: political adaption: partner with governments, NGOs, SOEs. show local commitment (finance, local development)

social adaption: Local stakeholder management

Question 16

MNC adaptability: economic. Why, how, cons.

Answer 16

Design local business model, Local manager is key player.

Objective: social capital (access to information/ informal network).

Con: Image spillovers from local partner. Fast growth is problematic

Question 17

What is institutional arbitrage

Answer 17

Exploitation of formal and informal institutional differences.

e.g. formal: IP standards, tax rates, labor regulations.

e.g. informal: benefot of popularity of US culture, label french wine

Question 18

Characteristics of EMNEs

Answer 18

From an emerging market. Agile/flexible. Disruptive innovations/frugal. Internationalize in the “wrong” way

Question 19

EMNE internationalizing: Springboard perspective

Answer 19

• acquire critical resources needed to compete at home or abroad.
• to avoid intitutional or market constraints
• If you don’‘t have the O, go get it. get access to competitive advantage
• can overcome barriers to entry
• gain advantage/knowledge/asset take it back to home market

e.g. Indian firm bought german company

Question 20

What are challenges of the springboard perspective

Answer 20

It is hard to acknowledge, implement, and integrate advantages achieved in the environment.
Lack of experience

Question 21

What is the LLL framework

Answer 21

Linkage, leverage, learning:

linkage:
o EMNEs are not leveraging their advantages but leveraging the advantages of other firms through linkages. Preferable through JVs (mitigate risk)

Leverage:
o focus on resources that are available externally and the accessibility of these resources, rather than spreading your own O-advantage

Learning:
- Learn through repeated acquisitions, ensure knowledge flow between partner and EMNE

Question 22

How are O different in EMNEs

Answer 22

Ownership is not necessariluy something you have, you might acquire it. Also, you don’t want to diffuse the O, you enter markets to gain theirs.

O could however be:
- strong relationships
- market understanding
- contry of origin effect
- the industry they operate in

So saying a firm can only internationalize when they are unique, transferable is NOT true

Question 23

Institutional arbitrage logic (EMNE view)

Answer 23

exit view:Although it can be a method for utilizing institutional voids, it can also be an escapism from the home, and avoid weak institutional environments. They will often go for advanced markets.

Exploitation view:At the same time they might exploit their institutional commonality and dare to operate in fucked locations

Question 24

EMNES and OLI - L argument

Answer 24

All resources are already eaten by the existing firms. you need to be their friend to dine with them. Internationalizing is not enough, establish relationshis. This affects your location decision, where do you have friends?