Does environmental management help foreign firms outperform local firms in emerging economies? While existing research suggests that environmental management may or may not benefit firm performance, the question is particularly under-investigated in the emerging economy context. Using the data on foreign investment into China, this study explores whether foreign firms that are under greater environmental pressure, at home or at the host, outperform comparable local firms in an emerging host country. In making this (...) comparison, we use propensity-score matching and a difference-in-differences approach to handle the problem of endogeneity inherent in comparing the performances of foreign versus local firms. We find empirical support that foreign firms perform better than local firms when they are under high environmental pressure in the emerging host country, and this result is driven by the foreign firms originating from countries with high environmental pressure. (shrink)

Using data on shareholder-initiated class action lawsuits in the US, I investigate the corporate scandals of US-listed foreign firms. The shareholders of scandal firms suffer considerable loss in both the short term and the long term. I document that firms domiciled in countries with weak institutions are more likely to be embroiled in corporate scandals, but such a relation can be moderated by the presence of Big 4 auditors. Investors automatically adjust for undiscovered misconduct when valuing (...) the stocks of non-scandal firms. Investors rely on the audit quality to form their expectations about the severity of undiscovered misconduct, and thus impose less negative spillovers on firms with Big 4 auditors, especially when the firms are from countries with weak institutions. Taken together, my results suggest that listing on US exchanges does not fully compensate for weak local institutions; voluntarily bonding to a more stringent audit process has an incremental effect on protecting shareholder interests and enhances the confidence of investors in firms’ financial integrity. (shrink)

Black and Gilson have argued that “venture capital can flourish especially – and perhaps only – if the venture capitalist can exit from a successful portfolio company through an initial public offering, which requires an active stock market.” But nothing in the Black and Gilson analysis requires that the exit option be a domestic capital market. In this article, I use the phenomenon of Israeli hi-tech companies going public on the Nasdaq as a case study to explore the connection between (...) a venture capital industry and domestic capital markets in a world of global capital and product markets. (shrink)

Stakeholder literature tends to presume that effective stakeholder dialogue, occurring directly or indirectly, among a focal firm, local communities, governments, and nongovernmental organizations is desirable for successful firm–stakeholder relationships. Even if theoretically desirable, effective dialogue does not always occur. There are two key theory-informing lessons in Botnia’s Fray Bentos successful green field pulp mill investment and start-up in Western Uruguay. First, critics could not halt the project politically supported by Uruguay in an expanding multi-party international dispute. Second, the Botnia corporate (...) communications process did not succeed in building consensus relationships, and attention was not paid to discourse creating shared meanings among all stakeholders. Participatory relationships were few, and successful dialogue was at best limited to supporters. This article uses discursive analysis to examine how newspaper and press release texts and language used therein both shaped and reflected the dynamically changing nature of firm–stakeholder relations in the Fray Bentos dispute. Despite the focal firm’s professed good intentions to create participatory relationships with its stakeholders during the building project, various stakeholders opposed the project and Botnia was caught in the crossfire of heated debate between Uruguay and Argentina. Three different frames changing over time are identified: the investment frame, the conflict frame, and the political frame. The analysis shows that the relationships between the focal firm and stakeholders involved many meanings only partly shared, due in part to a lack of corporate appreciation for the role of language in managing firm–stakeholder relationships. (shrink)

In this study, we examine how top management teams' foreign experience affects firms' green innovation performance and what role environmental regulation plays in their association. Using a large data set on firms' green patents and foreign work or education experience of top management teams from China, we find robust evidence that firms whose top management team members have foreign experience achieve significantly more green patents, and this positive relationship is more pronounced for firms (...) subject to strong environmental regulation. Our findings indicate that via enhancing firms' green innovation performance, top management teams' foreign experience has a positive corporate governance effect on advancing sustainable social development, and environmental regulation is helpful to promote this effect. (shrink)

This paper analyses the role of foreign and local companies in shaping Brazilian positions on global sustainability. It deals with an empirical investigation of CSR practices of firms from the electronics, food, and personal care sectors in response to pressures of 'market' and 'non-market' stakeholders. The results demonstrate that CSR decisions by foreign and local firms are triggered by organisational considerations and anticipated economic gains. The degree of implementation of CSR activities by foreign firms (...) is more advanced than that of local firms. The survey also confirms the hypothesis that market stakeholders exert pressure on companies and positively influence CSR. Non-market stakeholders seem to have a minor effect on corporate social responsibility decisions. We conclude that the institutional environment is a critical determinant of the extent to which the dialogue between stakeholders and companies leads to the attainment of sustainable development. (shrink)

Despite the rich body of research on the outward foreign direct investment (OFDI) by Chinese multinationals, little attention has been given to the fact that China’s OFDI is facing a high failure rate even in their initial attempt to enter a foreign market. Grounded on institutional theory, this study provides a nuanced view of the expansion dynamic of Chinese multinational firms overseas using a unique dataset that contains both successful and troubled Chinese foreign market entry attempts (...) between 2018 and 2021. We find that at the firm level, state-owned firms are more likely to face difficulties when trying to enter a new market compared to their private counterparts. Firms’ corporate social responsibility (CSR) reporting reduces the chance of failure. These effects are conditioned on the political, economic, and cultural distances between the home and host counties. (shrink)

Large foreign firms’ interventions in violent conflicts have drawn increasing research attention. Nonetheless, scant research has investigated how foreign small and medium-sized enterprises (SMEs), which have little capacity in peacebuilding, can protect themselves from violent conflict risk. Drawing upon the instrumental stakeholder theory (IST), this study explores two specific local community-oriented corporate social responsibility (CSR) practices (i.e., corporate philanthropy and workforce localization) as violent conflict risk buffering strategies for foreign SMEs. Further, we examine their varying effects (...) in different institutional environments (i.e., host country media freedom and labor rights protection). Using data from a cross-country survey of Chinese foreign SMEs combined with archival data from multiple sources, we empirically confirm the attenuating effects of both corporate philanthropy and workforce localization on foreign SMEs’ violent conflict risk. Besides, we discover that host country labor rights protection strengthens the mitigation impact of workforce localization on violent conflict risk. Our study advances the literature on IST and CSR by revealing the risk mitigation mechanism of CSR activities for foreign SMEs and elucidating its institutional boundary conditions. (shrink)

Multinational companies (MNCs) frequently adopt corporate social responsibility (CSR) activities that are aimed at providing ‘public goods’ and influencing the government in policymaking. Such political CSR (PCSR) activities have been determined to increase MNCs’ socio-political legitimacy and to be useful in building relationships with the state and other key external stakeholders. Although research on MNCs’ PCSR within the context of emerging economies is gaining momentum, only a limited number of studies have examined the firm-level variables that affect the extent to (...) which MNCs’ subsidiaries in emerging economies pursue PCSR. Using insights from resource dependence theory, institutional theory, and the social capital literature, we argue that MNCs’ subsidiaries that are critically dependent on local resources, have greater ties to managers of related businesses and to policymakers, and that those that are interdependent on the MNCs’ headquarters and other foreign subsidiaries, are more likely to be involved in PCSR. We obtain support for our hypotheses using a sample of 105 subsidiaries of foreign firms that operate in India. Our findings enhance our understanding of the factors that determine MNCs’ political CSR in emerging economies. (shrink)

Using a large sample of 3,040 U.S. firms and 16,606 firm-year observations over the 1991–2010 period, we find strong evidence that firm internationalization is positively related to the firm’s corporate social responsibility rating. This finding persists when we use alternative estimation methods, samples, and proxies for internationalization and when we address endogeneity concerns. We also provide evidence that the positive relation between internationalization and CSR rating holds for a large sample of firms from 44 countries. Finally, we offer (...) novel evidence that firms with extensive foreign subsidiaries in countries with well-functioning political and legal institutions have better CSR ratings. Our findings shed light on the role of internationalization in influencing multinational firms’ CSR activities in the U.S. and around the world. (shrink)

A by-product of the Watergate investigations into illegal political contributions and money-laundering was the revelation that American corporations had been making questionable payments to foreign officials to gain business advantages. That discovery was the driving force behind passage of the FCPA in 1977. Many since have complained that the law put American firms at a disadvantage in international trade. This paper assesses the credibility of that claim, as well as exploring the socioeconomic implications of corruption in a world (...) of intensifying international competition. Based on the literature review, examination of international trade data and intensive interviews with foreign firms doing business in Nigeria, the paper reaches the following conclusions:1. Enforcement of FCPA has waxed and waned, but there is no evidence that its enforcement has impeded the growth of U.S. trade. In fact, trade with countries previously considered "bribe prone" has out-paced the growth of trade with non-bribe-prone countries, despite FCPA. (shrink)

As foreign direct investment in the U.S. continues to become both more visible and controversial, the general public remains skeptical about the corporate citizenship of these foreign affiliates. Four dimensions of corporate citizenship — orientations, organizational stakeholders, issues, and decision-making autonomy — were used to compare the inclinations of foreign affiliates with the domestic firms operating in the U.S. chemical industry. The only significant differences between the U.S. sample and those firms headquartered in other countries-of-origin (...) were found in the area of corporate citizenship decision making autonomy. (shrink)

The authors analyze the impact of human rights conditions on foreign direct investment (FDI). Extant literature in this area raises conflicting expectations. Although the “conventional wisdom” posits that repression creates a stable, compliant, and relatively inexpensive host for FDI, there are contending arguments that the protection of human rights reduces risk and contributes toward economic efficiency and effectiveness. Moreover, the burgeoning “spotlight” regime may also punish firms who locate in repressive regimes. Conceptualizing FDI as a two-part process—the initial (...) decision to invest and the subsequent decision of investment amount—the authors assess human rights as a determinant of FDI. Using a two-stage model, they test their hypotheses across developing countries for the years 1980 to 2003. They find that human rights are a significant determinant of the amount of FDI inflows. (shrink)

This study explores the realm of sustainability by examining the influence of female directors' foreign experience on green innovation across various industry sectors and corporate board structures. Specifically, the research focuses on the impact of female directors' foreign experience on green innovation in Chinese listed firms from 2004 to 2021. Our findings show that female directors with foreign experience have a positive and significant effect on green innovation. Further analysis indicates that this relationship is positively and (...) significantly moderated by state-owned enterprises, larger firms, firms operating in polluting industries, environments with low market competition, and the presence of foreign directors on the board. The robustness of our results is confirmed through the use of different econometric techniques, alternative measures of dependent and independent variables, and addressing endogeneity concerns. Overall, our study suggests that female directors with foreign experience enhance the transfer of environmental and sustainable knowledge and practices, thereby fostering green innovation within Chinese listed firms. (shrink)

The paper discusses the Chinese policy environment as regards the experiences of foreign firms in China. In particular, the study focuses on the changes in China’s policies toward foreign-invested firms and the companies’ perceptions of protectionism of the Chinese regulatory environment. Theoretically, the paper reflects approaches in international political economy and business studies on the bargaining relations between host states and firms, and institutional perspective on business strategy that focuses on the dynamic interaction between organizations (...) and their institutional environment. Hence, the approach takes into account the formal and informal institutional constraints that firms face in a particular institutional framework. Drawing from international survey data, as well as interviews with China-based Finnish firms, the paper analyzes the different types of formal and informal protectionism that foreign companies face in China. It is found that foreign firms perceive the Chinese policy measures as increasingly protective, strict toward foreigners, and favoring of local companies. This is based on China’s strategy to remove the earlier preferences for inward foreign direct investment and to support, instead, the growth of indigenous companies. At the same time, the Chinese market presents such a potential that attracts foreign firms to increasingly invest in the country. China has a strong position in competing for investments: its aspiration for higher technology, together with its labor resources, gives China an unique advantage in bargaining with foreign firms over investments. (shrink)

The disclosure of corporate environmental performance is an increasingly important element of a firm’s ethical behavior. We analyze how the legal origin of foreign institutional investors affects a firm’s voluntary greenhouse gas emissions disclosure. Using a large sample of firms from 36 countries, we show that foreign institutional ownership from civil law countries improves the scope and quality of a firm’s greenhouse gas emissions reporting. This relation is robust to addressing endogeneity and selection biases. The effect is (...) more pronounced in firms from non-climate-sensitized countries, for which the gap between firms’ environmental standards and investors’ environmental targets is potentially larger, and in less international firms. Firms with a higher level of voluntary greenhouse gas emissions disclosure also exhibit higher valuations. (shrink)

We examine whether and how CEO foreign experience affects firm’s green innovation. Using a sample of Chinese public companies and hand-collected CEO foreign experience data, we document a positive association between CEO foreign experience and corporate green innovation. Furthermore, consistent with the view that CEOs with foreign experience would play a more significant role when provided with more resources, we find that the positive relationship is more pronounced in less financially constrained firms, in state-owned enterprises, (...) and in less competitive industries. Additional analyses indicate that enhanced environmental ethics and general competency are two potential mechanisms through which CEO foreign experience affects corporate green innovation. Finally, we find that CEO foreign experience is positively related to green innovation quality and internationalization. Collectively, these findings suggest that CEO foreign experience is a significant factor for corporate green innovation in emerging markets. (shrink)

The selection process for firm participation on foreign trade missions during the Clinton administration has received much attention. Although critics said seats were exchanged for political contributions, government officials argued they selected internationally competitive firms capable of leveraging the contacts the mission provided. This article provides empirical evidence consistent with both claims. Firms with high levels off oreign trade competency were almost six times more likely to be chosen for participation than firms with little international experience, (...) whereas firms making large soft money donations were five times more likely to be chosen for participation than firms making no soft money donations. (shrink)

In this paper, we employ the unique qualified foreign institutional investors (QFII) scheme in China to investigate whether and how the different religious beliefs in the areas where foreign institutional shareholders from are associated with the corporate social responsibility (CSR) performance of domestic firms. After controlling for other determinants, we find robust evidence that firms with QFII investors from areas with stronger religious beliefs have better CSR performance than those that do not have these beliefs'. This (...) association is more pronounced when a QFII has a shorter holding period, has a relatively large ownership in the firm, or is a more committed investor in China. The above moderating results show that the stock preference may be a channel through which religious QFIIs affect firms’ CSR performance. Our paper contributes to the growing body of literature on CSR and on the effects of investors’ religious beliefs. It also offers useful guidance to listed companies, institutional investors, regulators, and other stakeholders. (shrink)

Can mandated adoption of corporate social responsibility (CSR) improve firm value? Most CSR adoption is purely voluntary. However, governments regularly encourage CSR adoption with soft regulations that vary from simply endorsing and symbolically supporting CSR to requiring the adoption of specific practices. Governments have resisted fully mandating CSR because there is some concern universally that mandated CSR may reduce firm value. There is, however, no empirical clarity as to whether mandated CSR impedes or improves firm value. We address this uncertainty (...) by analyzing the effects of the mandated adoption of CSR that the government of India legislated in 2014. Drawing on a sample of 1,526 publicly traded firms and deploying a combinative analytical framework comprising an event study, regression discontinuity design, and a difference-in-differences technique, we conclude that India’s CSR mandate did, in fact, increase value for all firms bound by the mandate. This value-enhancing effect was greater for foreign firms relative to domestic firms. Our results refute previous research showing that India’s CSR mandate diminished firm value. (shrink)

In this article, we examine the factors determining the representation of women on boards of directors by considering three main questions. The first question deals with the relationship between characteristics of ownership and governance on one side, and female directorship on the other. The second major question concerns the demographic attributes of women directors, such as nationality, foreign experience, educational level, business expertise, and connections to external sources. The third important question refers to women in senior positions on French (...) boards (e.g., as independent members or board subcommittee members) in relation to firm characteristics and women’s demographic attributes. Our study focuses on French large- and mid-capitalized companies belonging to the SBF120 stock market index during a 5-year period running from 2000 to 2004. First, our results give evidence that the appointment of women directors is strongly related to family ownership and board or firm size. Second, the appointment of women directors is related to their professional services, valuable skills, and network links. Furthermore, we show that women face a double glass-ceiling problem, and note that French firms rely more on the demographic attributes of their women directors when they are appointed to senior board positions. Our study sheds light on issues concerning the law that comes into force in 2016, which imposes quotas of women members on boards of directors in French companies. (shrink)

This paper is intended to investigate the role of Venture-Capital Syndication background in the relationship between intellectual capital and portfolio firm performance ; specifically, this article examines the moderating effect of VCS’s leading firm background and member heterogeneity on the effect of IC on PFP. This study used a modified VAIC model to measure IC to compose a 4-component variable including human capital, structural capital, relational capital, and innovation capital. The data were collected from VCS-backed and listed firms in (...) China during 2014 to 2018 applying the pooled OLS model for hypotheses test, Generalized Method of Moments to reduce endogeneity and unobserved factor control, and also return on equity instead of ROA for the robustness test. Empirical results showed that IC and its components can improve PFP for VCS-backed firms in China; in detail, IC showed greater impact on performance of firms invested by foreign lead investors than in private or government VCS, specially reflected in the impact of innovation capital on PFP. Furthermore, IC showed weaker impact on PFP of mixed VCS-backed firms compared to pure VCS-backed firms and showed diminished effect on higher VCS member heterogeneity mainly reflected in the impact of relational capital on firm performance. These findings propose a new way of combining IC and VC to improve firm performance and are beneficial to theoretical development of IC and VC as well as a perspective for VC firm managers to choose suitable partners prior to join a VCS. (shrink)

This study aims to determine whether political connections and foreign investments influence the level of Environmental, Social, and Governance (ESG) disclosure among listed firms. To empirically explore these relationships, we utilized a novel dataset of 111 listed manufacturing firms on the HOSE stock exchange in Vietnam, covering the period from 2015 to 2022. Content analysis was conducted to assess the levels of ESG disclosure, while ordered logit and random effect estimators, along with several robustness checks, were applied (...) to quantify the impacts of political connections and foreign investments. Our findings reveal that foreign connections are positively correlated with higher levels of ESG disclosure, whereas politically connected firms are associated with negative impacts and lower levels of ESG disclosure compared to those with foreign connections. These results address the research questions effectively and contribute to the literature by offering an updated view of current ESG practices in Vietnam, an emerging economy with evolving ESG norms. The findings provide both theoretical and practical contributions to the understanding of ESG disclosure, with important implications for policy-makers and business leaders. (shrink)

This study adds to the growing research exploring the consequences of knowledge hiding in organizations. Drawing from the social exchange theory and the norm of reciprocity, this paper examines the direct and indirect—via distrust in supervisor—relationships between supervisor knowledge hiding and supervisee organizational citizenship behavior directed at the supervisor in the context of the Middle East. Using a supervisor–supervisee dyadic design, two-source data were obtained from 317 employees of 41 Saudi firms. The findings suggest that supervisees’ distrust in their (...) supervisors mediates the significant and negative relationship between SKH and supervisees’ OCB-S. Furthermore, the significant and positive relationship between SKH and distrust in supervisor is more pronounced for foreign workers than for local workers. This study provides empirical support and a better understanding of the existence and consequences of SKH for local and foreign workers and also discusses the theoretical and practical implications of the findings. (shrink)

Using two national culture dimensions, we show that the influence of firms’ corporate social performance on corporate financial performance hinges on culture. Specifically, CFP is higher in those firms where CSR initiatives are congruent with the cultural environment. CSP has a negative impact on CFP for those firms domiciled in countries which are individualistic and favor flexibility. These findings are amplified for those firms with low levels of foreign influence in terms of institutional ownership and (...) sales. Using a dataset covering 5334 firms from 41 different countries, our results indicate that culture and CSR initiatives have a powerful interaction effect in determining CFP, suggesting that CSP’s impact is dependent upon the culture of the country where the firm resides. (shrink)

This paper analyses the ethical performance of foreign-investment enterprises operating in China in comparison to that of the indigenous state-owned enterprises, collectives and private enterprises. It uses both the deontological approach and the utilitarian approach in conceptualization, and applies quantitative and econometric techniques to ethical evaluations of empirical evidences. It shows that according to various ethical performance indicators, foreign-investment enterprises have fared well in comparison with local firms. This paper also tries to unravel the effect of a (...) difference in business culture and competitive market forces on ethical performance by comparing the behavior of foreign-investment enterprises with that of the indigenous state-owned enterprises and collectives on the one hand, and with that of the indigenous private enterprises on the other. (shrink)

This study investigates the influence of chief executive officers' (CEOs) career horizon on the adoption of Global Reporting Initiative (GRI) standards for corporate social responsibility (CSR) reporting. Using data from A-share Chinese listed firms on the Shanghai and Shenzhen stock exchanges from 2010 to 2020, we employ logistic regression analysis to examine the empirical relationship. Our findings indicate that companies led by CEOs with shorter career horizons (older CEOs) are less inclined to adopt GRI reporting standards for CSR reporting. (...) This association is particularly pronounced in non-state-owned enterprises compared to state-owned enterprises. Additionally, we observe a weaker relationship between CEO career horizon and GRI adoption when the CEO possesses foreign experience. These results remain robust across various measures of CEO career horizons and econometric methodologies as well. The implications of our findings are significant for understanding the development and implementation of GRI standards for CSR reporting, particularly within the context of China. (shrink)

Using panel data of 4,244 company years, we examine whether and how corporate social performance affects a firm's capacity to achieve profitable sales in foreign markets. Based on our extension of instrumental stakeholder theory into the international arena, we hypothesized a U-shaped relationship between CSP and multinationality. Results supported our contention that multinational enterprises need to be substantially committed to social performance objectives if they are to recoup the cost of their CSP investments, and improve their capacity to compete (...) in foreign markets. MNEs engaged in intermediate levels of CSP achieve lower levels of multinationality than firms operating at either anchor of the social performance continuum. In addition, this study demonstrates that CSP moderates a well-established relationship in international business literature - the relationship between R&D investment and a firm's multinationality. Implications for research and practice are discussed. (shrink)

This study investigates the antecedents of human rights infringements by emerging market firms. We used fuzzy set qualitative comparative analysis to examine HRIs in 245 firms based in eight emerging markets, between 2003 and 2012. Our findings disclose three equifinal configurations of high levels of HRIs, all involving EFs that have expanded to a high number of foreign markets: large, old, low performing state-owned enterprises operating in high quality institutions’ home and host markets, small, young, over-performing EFs (...) operating in low quality institutions’ home and host markets, and finally large, old, high performing SOEs, operating in low quality institutions’ home and host markets. We contribute to the literature by examining a novel dataset on HRIs by EFs, and by building a configurational explanation of HRIs that bridges the arguments of the institutional theory and strain theory literatures on corporate wrongdoing. (shrink)

This study examines the role of foreign institutional ownership in corporate social responsibility (CSR). Using the Shanghai-Hong Kong Stock Connect as a quasi-natural experiment, our difference-in-differences estimation shows that foreign institutional ownership drives firms’ CSR corporate social responsibility. Further, the positive effect of foreign institutional ownership on CSR is motivated by foreign institutional investors shifting the stakeholders’ logics about social responsibility, not by profit maximization. We also provide evidence that this effect of foreign institutional (...) ownership on CSR is more pronounced among firms with fewer political connections and with non-overconfident CEOs. Overall, our results indicate that foreign institutional investors transmit social norms and shift stakeholders’ logics regarding social responsibility and, in turn, propel firms to improve CSR to satisfy their stakeholders’ expectations. (shrink)

The United States Government does not mandate that US based firms follow US social and environmental law in foreign markets. However, because many developing countries do not have strong human rights, labor, and environmental laws, many multinationals have adopted voluntary corporate responsibility initiatives to self-regulate their overseas social and environmental practices. This article argues that voluntary actions, while important, are insufficient to address the magnitude of problems companies confront as they operate in developing countries where governance is often (...) inadequate. The United States can do more to ensure that its multinationals act responsibly everywhere they operate. First, policymakers should define the social and environmental responsibilities of global companies. They must consistently make their expectations for global business clear – and underscore that this objective can often be accomplished without mandates. Second, the US should closely examine the policies that undermine global Corporate Social Responsibility (CSR) and address the many conflicting signals sent by policymakers. Third, the President should make the US government a CSR model by examining how to use its purchasing power to promote human rights. Finally, the US government should require pension funds to report on the social and environmental consequences of their investments. In these ways, Americans can mind our business – and thus make sure that US based firms do not undermine social and environmental progress when they operate in the developing world. (shrink)

In this article, we discuss a number of challenges with the empirical study of emotion and its relation to moral judgment. We examine a case study involving the moral foreign-language effect, according to which people show an increased utilitarian response tendency in moral dilemmas when using their non-native language. One important proposed explanation for this effect is that using one’s non-native language reduces emotional arousal, and that reduced emotion is responsible for this tendency. We offer reasons to think that (...) there is insufficient evidence for accepting this explanation at present. We argue that there are three themes that constrain our current ability to draw firm empirical conclusions: 1) the frequent use of proxies or partial measures for emotions, 2) the lack of a predictive and generalizable theory of emotion and specific emotion-types, and 3) the obscurity of a baseline level of neutrality with respect to participant emotion. These lessons apply not only to research on the moral foreign-language effect, but to empirical research in moral psychology more generally. (shrink)

This paper explores the role of ideology in attempts to influence public policy and in business representation in the EU–China solar panel anti-dumping dispute. It exposes the dynamics of international activity by emerging-economy multinationals, in this case from China, and their interactions in a developed-country context. Theoretically, the study also sheds light on the recent notion of ‘liability of origin’, in addition to the traditional concept of ‘liability of foreignness’ explored in international business research, in relation to firms’ market (...) and political strategies and their institutional embeddedness in home and host countries. Through a qualitative analysis of primary and secondary materials and interview data with key protagonists, we provide a detailed evolution of the case, the key actors involved and their positions, arguments and strategies. This illustrates the complexities involved in the interaction between markets and ideologies in the midst of debates regarding different forms of subsidy regimes for renewable energy, free trade versus protectionist tendencies by governments, and the economic and sustainability objectives of firms and societies. The case shows how relative newcomers to the EU market responded to overcome a direct threat to their business and became, with support from their home government, active participants in the public debate through interactions with local commercial partners and non-governmental organisations. Firms adopted relatively sophisticated strategies to reduce their liabilities vis-à-vis host-country institutions and local stakeholders, including collective action, to increase their legitimacy and reputation, and counter ideologically based attacks. We also discuss implications and limitations. (shrink)

In 1978, 16 months after Mao Zedong’s death, China’s new leader, Deng Xiaoping, introduced market reforms and an “opening” to the West that allowed the US company Hewlett-Packard to enter China in 1981. Shortly thereafter, HP began a partnership with the Chinese company Legend Computer, through which HP transferred its technology in four main areas: product technology, business model, management practices, and strategic planning processes. This technology transfer seems to be a “just exchange” in that HP received access to China’s (...) market while China received key managerial, marketing, and product technologies. Although multinationals are often criticized for their dealings with developing nations, the HP–Legend case provides an illustration of how a company from an industrialized nation can deal justly with a developing nation and assist in advancing its development. The transfer of technology from HP to Legend was facilitated by several factors, including HP’s historical willingness to help startups, its strategic posture, a favorable local environment, Legend’s recognition of its own needs, its willingness to learn from a foreign company, and the incentives to share technology that the Chinese government provided. (shrink)

Using a manually collected dataset on the overseas experiences of directors of Chinese listed firms, we examine the effects of returnee directors on firms’ corporate social responsibility engagement. Our results show that returnee directors significantly improve their firms’ CSR engagement. The positive relationship between the percentage of returnee directors and CSR engagement is more significant when a firm is in a competitive industry, when a firm has no government ownership, when a firm’s CEO is not politically connected, (...) and when a firm’s CEO is older. Furthermore, we find that only long-term foreign professional or academic experience matters, whereas short-term visiting experience does not. Finally, our results are robust after controlling for endogeneity. Therefore, this paper offers clear policy implications by suggesting that hiring more returnees as corporate directors is an efficient way to enhance firms’ CSR, which may be of particular interest to regulators in emerging markets. (shrink)

Corporate anti-corruption initiatives can make a substantial contribution towards curtailing corruption and advancing efforts to achieve the United Nations’ Sustainable Development Goals. However, researchers have observed that underdeveloped assumptions with respect to the conceptualization of corruption and how firms respond to corruption risk impeding the efficacy of anti-corruption programs. We investigate the relationship between the perceived level of corruption in foreign host countries and the organizational structure of subsidiary operations established by multinational corporations. Foreign host market corruption (...) is disaggregated into two components—private and public corruption. We employ an uncertainty-based perspective grounded in transaction cost theory to focus upon the distinct mechanisms through which private and public corruption can each be expected to impact a foreign subsidiary’s organizational structure [wholly-owned subsidiary or a joint venture with a local partner]. We expect that each type of corruption fosters a different type of uncertainty which predominates in shaping the MNC’s choice of foreign subsidiary investment structure. Hypotheses are developed and tested with a sample of 187 entries into 19 foreign host markets. Each type of corruption was found to exert a distinct effect upon the organizational structure of foreign subsidiaries. More precisely, while heightened perceived levels of public corruption were found to motivate MNCs to invest through a JV with a local partner rather than a WOS, more pronounced private corruption precipitated the opposite outcome. (shrink)

The role of sustainable development in the export intensity of small and medium-size enterprises represents an open research question. We consider sustainable development through the environmental, social, and governance dimensions as well as via firms’ innovative activity indicators. Our objective is to reveal the sustainability determinants of export intensity of SMEs in emerging markets subject to financial constraints, which is one of the major obstacles for SMEs. Our sample is based on the 2018–2020 Business Environment Enterprise Performance Survey data. (...) The Heckman model allows us to reveal the factors relevant for SMEs to gain access to foreign markets under the control of financial constraints specific for SMEs. We also analyze the determinants of the SMEs’ share of direct exports in revenue. Our results demonstrate that innovative activity and corporate social responsibility facilitate entry to foreign markets, while equity concentration is a major deterrent. In particular, we reveal a significant positive effect of research and development investment on export intensity. Our findings highlight the complex nature of the interrelations between the SMEs’ share of direct exports in revenue and ESG consciousness. We find that other significant factors are political links of the top management, the gender composition of production and administrative units, employee training facilities, and ownership structure. (shrink)

This Article discusses the impact of the international financial crisis on Brazilian capital markets. While the banking industry was not severely affected, leading nonfinancial corporations experienced severe financial turmoil. Two Brazilian corporations cross-listed in the United States - Sadia S.A. and Aracruz Celulose S.A. - suffered billion-dollar losses when the Brazilian real unexpectedly plummeted in relation to the dollar. Despite earlier disclosure that these companies had engaged only in pure hedging activity, these great losses were found to be the result (...) of their highly speculative trading in currencyderivatives. Consequently, several private lawsuits were filed both in the United States and in Brazil. This Article takes a novel approach to the transnational securities litigation debate by examining the particular consequences of private litigation in a developed and in an emerging country. It compares the types of lawsuits filed and their final outcomes. Despite substantially similar alleged wrongdoing, the outcomes for securities holders in each jurisdiction contrast strikingly. Only U.S. investors of both companies were able to obtain substantial financial recoveries; Brazilian investors obtained none. This Article examines the reasons behind these discrepant results and the consequent economic distributional effects on global securities markets after the U.S. Supreme Court decision in Morrison. The Article argues that Morrison aggravates such shareholder cross-border non pro rata compensation and transfers of company value from foreign to U.S. investors. It identifies a set of costs borne by foreign investors, and so far neglected by scholars, as a consequence of the current status of U.S. and international securities law regimes. These costs are the result not only of the typical “circularity problem” in securities litigation, but also of a “double circularity problem” as they fall on foreign shareholders who also suffered equivalent damages to those experienced by the U.S. class being compensated. The Article then discusses potential policy reforms for fixing transnational securities litigation. (shrink)

Interest in sustainability is increasing, and research on ESG management continues. The first issue to be discussed in the present situation is the environment. The study between the environment and internationalization was conducted around two conflicting arguments. First, the pollution haven hypothesis states that multinational corporations move to countries with looser regulations depending on environmental regulation. Next is the Porter Hypothesis, which argues that well-designed environmental regulations offset the cost of compliance and ultimately help firms gain a competitive advantage (...) through innovation that enhances performance. However, the two arguments have not yet reached a consensus conclusion. In addition, studies on the national level and studies considering the distance between countries, an important factor in international management, are lacking. This manuscript aims to revisit the relationship between the strength of environmental regulation and foreign direct investment in the context of increasing environmental concerns. Differences between countries are an important field of international management, but research on environmental regulations is lacking. The purpose of this study is to examine the relationship between existing environmental regulations and FDI and to discuss how the distance between countries can affect existing theories. (shrink)

AbstractForeign direct investment (FDI) in offshore financial centers (OFCs) is gaining increased attention in business ethics research. Much of this research tends to focus on OFCs as locations where firms can avoid taxes, considering such behavior as unethical. Yet, there is dearth of studies on capital round-tripping by emerging market firms, which is an integral part of this phenomenon. Such round-tripping involves firms sending capital into OFCs only to invest it back in the home country under the (...) guise of “foreign” investment. Presently there is little discussion of the ethical implications of such round-trip FDI activities. In this paper, we conceptualize round-tripping as institutional arbitrage and look at the determinants and ethical implications of such investments into OFCs. Exploring Russian round-tripping we note that firms tend to invest more funds in OFCs that offer a combination of tax and secrecy, or secrecy and property rights protection arbitrage opportunities. In either case firms exploit the opportunities provided by institutional differences between the OFC and Russia while investing back into Russia. Our results tend to indicate that equating OFC investment to tax avoidance and thus deeming it as unethical behavior is too narrow an explanation in the case of emerging economy round-tripping. This is because such investments are often motivated by the unethical behavior of home country stakeholders and may in fact provide benefits to society. (shrink)

Last year marked the 20th anniversary of the Foreign Corrupt Practices Act (FCPA) of 1977. The FCPA is the first and only statute prohibiting bribery and other corrupt business practices by U.S. citizens and companies conducting business overseas. This paper provides an overview of the FCPA during the two decades of its existence. More specifically, the objectives of this paper are four-fold. First, the paper provides background information about the FCPA of 1977 and subsequent amendments in 1988. Second, the (...) paper discusses the enforcement of the FCPA since its passage by examining the number of cases prosecuted under the FCPA and the respective penalties imposed. Third, the paper discusses the economic impact of the FCPA by addressing whether the FCPA places U.S. firms at a competitive disadvantage. Fourth, the paper provides public policy recommendations to expand the reach and scope of the FCPA. It covers efforts to criminalize bribery through multilateral organizations, such as the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO), and the Organization of American States (OAS). It also covers bilateral arrangements and efforts by non-governmental organizations such as Transparency International. (shrink)

Various advocacy groups and primarily domestic-focused firms in developed countries have been pushing governments to include a "social clause" in trade treaties with less developed countries. Such a clause is designed to link trading access to markets in developed countries with improvements in working conditions in poor nations. The implications of such a clause for internationally-focused firms and how managers can effectively deal with human rights issues in their foreign operations are examined. Various constituencies in this debate (...) are identified and an integrated response system on the part of firms is presented. It is suggested that the best policy for firms to adopt would be to acknowledge the relevance of the social clause in today''s global economy and work closely with the various advocacy groups to ensure continuing public support while avoiding overly restrictive clauses in international trading agreements. (shrink)

This research uses an experimental approach to investigate the relationship between market orientation of a company and its level of success in international business. The aim of the study was to develop and use a market orientation scale that is appropriate to the sector. It was discovered that there are four hidden traits that drive market orientation. These include customers, rivals, departmental response, and overall customer satisfaction. According to the results, orientation toward one's customers is more essential than any of (...) the other traits, while orientation toward one's competitors has an inverted U-shaped connection with performance. The performance of the firm was not found to correlate in any way with the responsiveness of its departments. With the help of the comprehensive conceptualization, managers are able to develop specific kinds of orientations that are essential for higher levels of performance. (shrink)

Guanxi as one of the key factors leading to business success in China (PRC) has ironically been synonymous with bribery. This raises some serious questions: should Western foreign firms do business in China? How should they do business with Chinese firms? This study investigated the relationship between guanxi orientation and cognitive moral development in an attempt to determine whether the level of guanxi orientation of Chinese business people affects their ethical reasoning. Based on a classification of Chinese (...) enterprises (Nee, 1992), it was found that Chinese enterprises rely on guanxi for business to different extents. However, their levels of cognitive moral development are not significantly different, suggesting that guanxi orientation has very little to do with ethical reasoning (as captured through an established measure of cognitive moral development). Furthermore, time in profession was found to positively affect guanxi orientation; however, age failed to predict guanxi orientation and education turned out to be a negative predictor of guanxi orientation. (shrink)

This study explores differences between executives in the U.S. and Spain in their perceptions of ethical issues in pricing, specifically comparing a domestic firm's actions affecting a foreign market versus a foreign firm's actions affecting the domestic market. Overall, Spanish and American executives provided somewhat different responses to the scenarios. Findings indicate that ethical judgments and intentions among Spanish executives did not vary based on which country was harmed. U.S. executives generally perceived that a morally questionable act directed (...) at a foreign country was more unethical than a morally questionable act directed at the United States. Possible explanations for these findings are suggested. (shrink)

This article explores how the institutional context, including central and local governments, has co-evolved with business in relation to small cars and sustainability. This issue is very relevant for business and society in view of the environmental implications of the rapidly growing vehicle fleet in China, the economic importance attached to this pillar industry by the government, and citizen interest in owning and driving increasingly larger cars. The interactions between different levels of government, and with business in countries with a (...) large role for the state is a novel area of study in the business-society area and a complex one given the multitude of objectives and interests involved in industry competitiveness, economic development, energy security, and sustainability. The article shows that the central government has adopted policies to further the production and use of small cars, which it perceives as serving environmental, economic, and social goals. Concurrently, however, many local governments imposed restrictions on small cars and have, implicitly or explicitly, favored larger cars. There seems to be a clear linkage to municipal ownership of those domestic automobile companies which, via joint ventures with foreign firms, focused more on larger cars. By adopting a co-evolutionary approach focused on macro-level interactions, the case helps to shed some more light on concrete sustainability challenges, and broader government–business interactions in a highly institutionalized setting, contributing insights on issues that have remained underexposed in business and society research. (shrink)

So far overlooked by the international business ethics literature, we introduce, characterize, and normatively analyze the use of affective ties and networks in South Korea from an ethical point of view. Whereas the ethics of using Guanxi in China has been comprehensively discussed, Korean informal networks remain difficult to manage for firms in South Korea due to the absence of existing academic debate and research in this field. In this study, we concentrate mainly on the question of whether (...) class='Hi'>foreign firms will and can use affective ties in Korea. The informal social network forms are classified and contrasted with the conventional ethical approaches used in international business ethics to assess which categories can be regarded as ethical or unethical. Finally, foreign firms are advised how to cope with and use different affective network types. Although the nature of affective ties and networks in Korea differs from that found for instance in China, consistent with the conclusion of prior research, we recommend particularistic analysis and decision making regarding the circumstances in which to conclude affective ties and networks and when to opt out. We conclude that foreign firms in Korea should invest in establishing Inmaek, refrain from engaging in Yonjul, and support host country nationals’ Yongo ties. Moreover, it is suggested that foreign firms should find ways to monitor and manage informal ties effectively. (shrink)

Through corporate social responsibility activities, a firm can develop the capability for managing and benefiting from stakeholder relationships. This study refers to such a capability as stakeholder influence capacity. In a host country, locally sourcing parts and/or materials can generate economic value and improve social welfare. Moreover, local sourcing provides opportunities for a foreign firm to apply and advance SIC while closely interacting with host-country stakeholders. Accordingly, we expect that a firm, having gained SIC through CSR activities in its (...) home country, will be more likely to source parts and/or materials in the host country. We also expect that the relationship between SIC and host-country sourcing is conditional upon a foreign firm’s intangible resources and liabilities of foreignness. Our empirical analysis, using Korean datasets, supports the positive relationship between CSR and local sourcing. We find that this positive relationship is more pronounced either when the firm is committed to technology development or when its home and host countries are geographically or culturally distant. (shrink)