Dear friends and colleagues,
We are delighted to share the third issue of Global Strategy Journal for 2024. It is available at
https://onlinelibrary.wiley.com/toc/20425805/2024/14/4. This issue contains papers accepted through the regular process and grouped around the topics of Corporate governance and cross-border activities and Drivers of investment and divestment decisions. It also includes a perspective on the trade-off of blockchain technology for MNC global strategy.
In the context of Corporate governance and cross-border activities, May-Anne Very, Laurence Capron and Mauro Guillén examine how financial crises affect the positive (negative) relationship between the legal protection of shareholder (labor) rights and M&A activity in a country. Mike W. Peng, Joyce C. Wang, En Xie and Sergey Lebedev offer an integrating examination of why EMNEs often bid higher for targets in developed economies and why they often allow such targets significant autonomy. Sorin M. S. Krammer, Vlad-Andrei Porumb, Yasemin Zengin-Karaibrahimoglu and Joel Bothello consider business groups (GB) and study how BG affiliation impacts corporate social performance and the moderating role of formal and informal institutions. The second part of the issue unfolds around the Drivers of investment and divestment decisions. Jian Xu disentangles the de jure and de facto dimensions of institutional distances to examine their impact on firms embedded across heterogeneous jurisdictions. Kathrin Schwaiger, Petra Hennrich and Jan Hendrik Fisch analyze the impact of the success of previous investments on risk-taking in subsequent cross-border investment decisions
The papers are open-access, and you can get them by clicking on their titles.
If you are interested in reading forthcoming papers accepted but not yet published in an issue, you can find them at https://onlinelibrary.wiley.com/toc/20425805/0/0
We look forward to receiving your best work for consideration for publication.
Best wishes,
Gabriel R. G. Benito, Stewart Miller and Grazia Santangelo
Co-editors of Global Strategy Journal
Do financial crises moderate the influence of stakeholder rights protection on M&A activity: The influence of institutional logics and power?
May-Anne Very, Laurence Capron, Mauro Guillén
M&A represents a contested process of change in control influenced by two contending prevailing institutional logics: shareholder-centered and labor-oriented. These logics, whose respective power is influenced by national laws, shape mergers and acquisition (M&A) outcomes. Crises, like systemic financial crises, are periods during which these logics may be altered. This research examines how financial crises affect the positive (negative) relationship between the legal protection of shareholder (labor) rights and M&A activity in a country. Utilizing a dataset from financial services companies across 35 countries from 1990 to 2016, we find that financial crises significantly weaken the effects of both shareholder and labor rights on M&A transactions. Our findings emphasize the role of power dynamics amidst conflicting institutional logics in determining M&A outcomes during both crisis and non-crisis periods.
Theorizing about emerging multinationals' cross-border acquisitions
Mike W. Peng, Joyce C. Wang, En Xie, Sergey Lebedev
The emergence of multinational enterprises from emerging economies (emerging multinationals or EMNEs) has resulted in two puzzles: (1) Why do EMNEs often bid higher for targets in developed economies? (2) Why do EMNEs often allow such targets significant autonomy? From a theoretical standpoint, the two puzzles beg the question of whether an integrative answer exists. Extending property rights theory, we conceptualize an EMNE as a collection of assets over which an emerging-economy firm has residual control, gained predominantly through cross-border acquisitions. Leveraging a legitimacy-based view, we suggest that EMNEs suffer from legitimacy deficits. Overall, the key to theorizing about EMNEs' cross-border acquisitions and solving the two puzzles is to appreciate EMNEs' endeavors to simultaneously maximize joint value creation, minimize target incentive loss, and overcome legitimacy deficits.
Beacons not burdens: Business groups and corporate social performance around the world
Sorin M. S. Krammer, Vlad-Andrei Porumb, Yasemin Zengin-Karaibrahimoglu, Joel Bothello
Prior studies on business groups (BGs) have predominantly focused on the impact of group affiliation on financial performance. In contrast, we argue that BG affiliates will outperform standalone firms in terms of corporate social performance (CSP) and that this effect will be positively moderated by the strength of formal and informal institutions. Moreover, we examine also differences among BGs and hypothesize that diversification and hierarchy of the group will negatively affect the CSP of affiliates. Employing a panel of 4368 firms from 43 countries between 2003 and 2016 and a propensity score matching approach in our regressions, we find robust support for these predictions. Our findings advance two distinct strands of literature on BGs and, respectively, corporate social responsibility.
Rethinking institutional arbitrage: De jure exposure and de facto enforcement
Jian Xu
This article disentangles the de jure and de facto dimensions of institutional distances to examine their impact on firms embedded across heterogeneous jurisdictions. I argue that significant transaction costs occur only when the de facto implementations of regulations from both home and foreign jurisdictions become irreconcilable. Using an original dataset of the enforcement actions of the US Foreign Corrupt Practices Act (FCPA), I find that institutional arbitrage becomes infeasible for non-US-based firms with de jure exposure to the FCPA when the de facto judicial constraints over bureaucratic discretion are weak in these firms' home countries targeted by FCPA enforcement. De facto FCPA enforcement makes such US-listed firms more likely to divest from their home markets or voluntarily delist from US stock markets.
Does prior success influence risk-taking in foreign location decisions? A prospect theory perspective
Kathrin Schwaiger, Petra Hennrich, Jan Hendrik Fisch
Research suggests that foreign direct investment decisions can be biased and deviate from economic theory. This study deploys prospect theory to analyze the impact of the success of previous investments on risk-taking in subsequent investment decisions. Our theorizing suggests that prior success influences foreign investors' decisions to take host-country risk, and that this moderating influence on the risk-investment relation is specific to the type of risk. The results of an event-history study of 1259 location decisions support the notion that the success of previous investments encourages investors to enter host countries with high negative or positive risk, whereas it discourages them from entering locations with high mixed risk. The effects are stronger for investment locations that are similar than for those that are dissimilar.
------------------------------
Grazia Santangelo
Professor
Copenhagen Business School
Copenhagen
------------------------------