Decoupling in international business: Evidence, drivers, impact, and implications for IB research

Witt, Michael A.; Lewin, Arie Y.; Li, Peter Ping; Gaur, Ajai

doi:10.1016/j.jwb.2022.101399

Cited by 78 publications

(50 citation statements)

References 38 publications

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“…To understand whether deglobalization is indeed taking place, we must examine the changes in its defining institutional logic. Thus, we focus on politics and policies, which unambiguously have the largest impact on institutional logic changes (Witt et al, 2023 ). Particularly, we study the U.S. policies before and during the U.S.–China trade war.…”

Section: Crises Institutional Logics and The Vulnerabilities Of Globa...mentioning

confidence: 99%

“…In fact, some level of economic decoupling may have already taken place. Macro-level data on the outflow of capital has indicated some notable shift by foreign investors in China (Witt et al, 2023 ). According to the Institute of International Finance, foreign investors pulled $US 8.8 billion of funds from Chinese stocks and bonds in October 2022, compared to just $US 2.1 billion in September the same year, reflecting “changes in sentiment over geopolitical concerns and anxiety over Beijing’s zero-COVID policy” (Lee, 2022 ).…”

Section: Crises Institutional Logics and The Vulnerabilities Of Globa...mentioning

confidence: 99%

“…They are less ‘specific’ when they focus on the macro-level, e.g., nations or regions. For instance, China has been a target of the deglobalization logic, but the compliance pressure posed to MNEs operating in China is not as specific, particularly for those not considered strategically important (Witt et al, 2023 ). As the specificity of institutional tensions increases, the external pressure for compliance increases too, leaving MNEs with smaller room for discretion but more urgency for substantive responses.…”

Section: Mnes’ Responses To the ‘New’ Vulnerability Of Globalizationmentioning

confidence: 99%

“…The jurisdictional overlap between the competing logics has not yet targeted the firms but already posed formidable threats to their MNEs’ core businesses. For example, the political pressure for U.S. firms to relocate their GVCs out of China, ‘friend-shore’ (Coy, 2021 ), or ‘reshore’ to the U.S. (Witt et al, 2023 ) can potentially have a devastating effect on companies like Apple Inc., because the firm is heavily embedded in the Chinese market, which accounts for 25% of its total revenue, with majority of Apple’s products being produced in China by its supplier Foxconn (Richter, 2020 ).…”

Section: Mnes’ Responses To the ‘New’ Vulnerability Of Globalizationmentioning

confidence: 99%

“…Some scholars argue that COVID-19 has only marginally shifted globalization, and various manifestations of globalization will continue with global coordination playing an even more important role after COVID-19 (Contractor, 2022 ). By contrast, other scholars maintain that COVID-19 has intensified anti-globalization sentiments, fueled protectionism, and undermined multilateral institutions, resulting in a deglobalized and particularly regionally fragmented world economy with the U.S. and China being decoupled (Ciravegna & Michailova, 2022 ; Witt, Lewin, Li, & Gaur, 2023 ). Our paper suggests that neither logic will likely prevail in the short run, with the institutional unsettlement lasting for an undefined time period.…”

Section: Introductionmentioning

confidence: 99%

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Decoupling in international business: The ‘new’ vulnerability of globalization and MNEs’ response strategies

et al. 2023

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Section: Crises Institutional Logics and The Vulnerabilities Of Globa...mentioning

confidence: 99%

Section: Crises Institutional Logics and The Vulnerabilities Of Globa...mentioning

confidence: 99%

Section: Mnes’ Responses To the ‘New’ Vulnerability Of Globalizationmentioning

confidence: 99%

Section: Mnes’ Responses To the ‘New’ Vulnerability Of Globalizationmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Decoupling in international business: The ‘new’ vulnerability of globalization and MNEs’ response strategies

et al. 2023

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Locking in overseas buyers amid geopolitical conflicts

Fan,

Ma,

Cui

et al. 2024

J of Ops Management

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Geopolitical conflicts, particularly economic ones, introduce significant uncertainties into the global supply chain. The impact of these conflicts on cross‐border buyer–supplier transactions remains underexplored, as does the capability of global suppliers to mitigate such risks by locking in their foreign buyers. Employing a combined perspective of resource dependence theory and transaction cost economics, we examine a natural experiment to investigate the effects of the 2018 U.S.–China trade war on the transactional relationships between Chinese suppliers and their U.S. buyers. Our study reveals that the trade war generally adversely affected these buyer–supplier transactional relationships, leading to a negative abnormal transaction value in the affected dyads, which amounted to 18.42% of their pre‐event level. However, we find that this adverse impact can be attenuated when Chinese suppliers demonstrate superior innovation capabilities, higher corporate social responsibility performance, or fewer local political ties. These findings yield insights for international suppliers and buyers on strategies to maintain buyer–supplier transactions and minimize the detrimental effects on global supply chain relationships during geopolitical conflicts.

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The octopus that shrank: A historical analysis of how multinationals address policy and contractual uncertainty in a global value chain

Bucheli

Ciravegna

Sáenz

2023

Strategic Management Journal

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Research SummaryWe analyze how the evolution of the broad institutional environment influences the vertical integration strategy of a multinational corporation (MNC) leading a global value chain (GVC). We develop a history‐to‐theory study based on the evolution of the banana GVC between 1899 and 1991. We argue that when a MNC's bargaining power vis‐à‐vis the host government is strong, it will choose a governance structure that addresses contractual uncertainty. When the MNC's bargaining power declines because of changes in the institutional environment, it will prioritize a governance structure that protects its assets. We analyze the evolution of MNC's bargaining power as a result of the interaction of three levels of the institutional environment: global, home country, and host country.Managerial SummaryOur study examines vertical integration decisions in a global value chain (GVC) throughout its historical evolution. Using historical sources, we show that when MNC managers perceive their bargaining power to be sufficient to protect them from hostile government actions in host countries, their main concern is that of governing their activities as efficiently as possible by amongst others vertically integrating asset‐specific transactions. When their bargaining power declines, MNCs become more concerned with shielding their assets and rents from expropriations by host‐country governments, thus retreating from vertical integration. We illustrate that the bargaining power of MNCs changes as events at the global, home, and host country levels unfold. For example, MNCs' bargaining power declines in periods featuring economic nationalism, such as the 1960s–1970s.

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Decoupling in international business: Evidence, drivers, impact, and implications for IB research

Cited by 78 publications

References 38 publications

Decoupling in international business: The ‘new’ vulnerability of globalization and MNEs’ response strategies

Decoupling in international business: The ‘new’ vulnerability of globalization and MNEs’ response strategies

Locking in overseas buyers amid geopolitical conflicts

The octopus that shrank: A historical analysis of how multinationals address policy and contractual uncertainty in a global value chain

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