Dear friends and colleagues,
We are delighted to share the first issue of Global Strategy Journal for 2024. It is available at onlinelibrary.wiley.com/toc/20425805/2024/14/1. This issue contains papers accepted through the regular process and grouped around the topic of institutions.
Daniel Andrews, Andreas Schotter and Ajai Gaur offer a novel view of formal institutions as a layer cake, suggesting a structural relationship between higher-level and lower-level institutions. Irene Margaret, Frederiek Schoubben and Ernst Verwaal analyze the institutional conditions under which investors value international environmental management certification of MNEs. Mario Kafouros, Murod Aliyev, Panagiotis Piperopoulos, Alan Kai Ming Au, Joanne Wing Yee Ho and Susanna Yee Na Wong study how countries' institutional quality and interindustry variations in technological and market dynamism jointly influence firm competitiveness and performance in emerging economies. Alfonso Carballo Perez and Margherita Corina investigate how the presence of populist rulers affects foreign direct investment in democratic countries. Jens-Christian Friedmann and Torben Pedersen analyze the influence of national innovation policies on knowledge acquisition in the context of international alliances. Claudio Giachetti, Joseph Lampel and Ergun Onoz discuss the role of institutional quality on the use of MNEs' multimarket contact with competitors in a host country. Thomas DeBerge explores the relationship of firm global strategy and global value chain governance in the context of unethical practices within the value chain.
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 onlinelibrary.wiley.com/toc/20425805/0/0.
We look forward to receiving your best work for consideration for publication.
Gabriel R. G. Benito, Stewart Miller and Grazia Santangelo
Co-editors of Global Strategy Journal
Daniel S. Andrews, Stav Fainshmidt, Andreas P. J. Schotter, Ajai Gaur
We offer a novel view of formal institutions as a layer cake, suggesting a structural relationship between higher-level and lower-level institutions. In this context, inter-layer conflict imposes complex pressures on multinational corporations (MNCs). These tensions have become more rife amid the growth in global connectedness and the commensurate increase in the importance of within-country differences. Drawing on political science and economic geography research, we introduce regime type and the distribution of economic resources as conditions under which inter-layer conflict is most likely to arise. We leverage two caselets to illustrate the inter-layer conflict and the novel response options MNCs can deploy. Our perspective advances the theoretical understanding of intra-national institutional diversity, laying the groundwork for future research at the nexus of institutional theory and global strategy.
Irene Margaret, Frederiek Schoubben, Ernst Verwaal
Despite the prominence of International Organization for Standardization (ISO) 14001 certification as a global strategy instrument, there is persistent doubt about its effectiveness as a value-generating tool, especially for multinational corporations (MNCs). This study draws on institutional theory to explain the varying market valuations of international environmental management certification following a strongly binding multilateral environmental agreement. We submit that ISO 14001 certification increases the market value of MNCs more strongly following the institutional pressures exerted by the strongly binding Paris Agreement. This effect varies due to institutional country-of-origin effects and exposure to host countries with stringent environmental regulations. We provide empirical support using a difference-in-differences analysis of 3193 MNCs from 60 countries with pledged commitments to emission reductions in the Paris Agreement.
Mario Kafouros, Murod Aliyev, Panagiotis Piperopoulos, Alan Kai Ming Au, Joanne Wing Yee Ho, Susanna Yee Na Wong
This study explains how heterogeneity in firm competitiveness and performance in emerging economies is influenced jointly by the institutional quality of countries and interindustry variations in technological and market dynamism. The analysis of 12,888 firms from 16 emerging economies shows that while the performance advantages of institutional quality are strengthened for firms in technologically dynamic industries, the opposite pattern emerges in high market-dynamism industries. The study advances the institution-based view by explaining the mechanisms through which such effects occur and why two industry-specific boundary conditions (technological and market dynamism) influence differently the relationship between institutional quality and firm performance.
Alfonso Carballo Perez, Margherita Corina
We investigate how the presence of populist rulers affects foreign direct investment in democratic countries. Our analysis sheds light on the mechanisms by which this political force impacts firms' decisions, considering the effect of institutions and internationalization strategies at the firm level in the global arena. We test our theory using instrumental variables with a panel dataset of US multinationals in 37 democratic countries between 1999 and 2020. Our findings suggest that the presence of a populist ruler at the helm of government seems to undermine firms' foreign investment and it is potentially moderated by country-level institutions and firm-level internationalization. Collectively, our results offer new insights on how populism affects multinationals' investment decisions, contributing to the literature that examines the relationship between political pressure and investment decisions.
Jens-Christian Friedmann, Torben Pedersen
International alliances facilitate learning among firms by providing access to knowledge embedded in different countries, yet we do not know how the partnering firms' distinct national contexts shape their learning in alliances. This study brings together research on learning in alliances and research on national innovation systems to examine how innovation policies in the respective home countries of the focal firms and their partners can increase the effectiveness of knowledge acquisition in alliances. Our analyses indicate that supply-side innovation policies in the focal firms' home countries and demand-side policies in their partners' home countries increase the focal firms' knowledge acquisition from their partners.
Claudio Giachetti, Joseph Lampel, Ergun Onoz
Drawing on signaling theory and the international business literature that addresses the role of institutions, we argue that multinational enterprises (MNEs) that use multimarket contact (MMC)-that is, meet the same competitors in multiple countries-to reduce rivalry in a given country, will have their actions and performance influenced by the institutional quality of that country. More specifically, we contend that action observability is the mechanism that explains why institutional quality facilitates an MNE's use of MMC with competitors in a host country. We also contend that an MNE's ability to successfully reduce rivalry with host country competitors via MMC is contingent on the institutional quality distance between the MNE's home and host country. We test our hypotheses with data from the mobile phone industry.
I explore the relationship of firm global strategy and global value chain (GVC) governance, within a context of expanding responsibility boundaries for unethical practices in the value chain. Specifically, focusing on the tantalum supply chain within the digital electronics GVC, I conduct a case-based process study that contextualizes the different strategic responses of three manufacturers of tantalum capacitors when faced with similar efficiency, ethical, and institutional pressures. Integrating the GVC and global strategy literatures, I find that structural inertia in GVCs limits the efficacy of strategies that preserve, rather than alter, the governance structure, instead requiring a strategic restructuring carried out by individual firms, whose internalization of responsibility boundaries is encouraged by the institutionalization of these boundaries through public policy.
------------------------------Grazia SantangeloProfessorCopenhagen Business SchoolCopenhagen------------------------------