Managing institutional distance: Examining how firm-specific advantages impact foreign subsidiary CEO staffing

Rickley, Marketa; Karim, Samina

doi:10.1016/j.jwb.2018.05.002

Cited by 35 publications

(40 citation statements)

References 118 publications

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“…In summary, compared with their Singaporean and South African peers, the British and French MNB subsidiaries have been able to carve out a competitive advantage through longer local experience and local partnerships, as well as, more importantly, their multinationality and historical institutional contacts (the British MNB) and network externalities (the French MNB). We also find in our sample that localising subsidiary's top management does not seem to bring particular competitive edge (by contrast, we note that the French MNB, even with fewer local staff, is performing well); in this respect, our study sits well with Rickley and Karim (2018), who argue that as institutional distance increases, (certain) firms may be more likely to rely on generalist expatriates who are able to transfer tacit knowledge associated with the development of an asset of multinationality, rather than local managers who have more explicit knowledge about the host environment.…”

Section: Competitive Advantages In Multinational Bankingsupporting

confidence: 41%

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Competitive Advantages in a Hostile, Regulated Environment: Four Multinational Banks in India

Caussat

2021

Manag Int Rev

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International business literature has historically been divided between scholars exploring the local obstacles foreign firms face (thereby overlooking foreign firms’ capacity to deploy advantages locally) and those examining the internationalisation of firm-specific advantages (thereby overlooking the peculiarities of the local context in which foreign firms deploy their advantages). We still do not completely understand the process by which multinational enterprises (MNEs) – especially service MNEs – develop competitive advantages in relation to the host environment. Using a multiple-case study of four multinational banking subsidiaries in India, this research aims to explore the variety of competitive advantages deployed by foreign multinational banks (MNBs) in a hostile, competitive environment: the Indian banking industry. This article’s main contribution is to bridge the gap between the obstacle-oriented internationalisation literature and the advantage-oriented literature through an exploration and comparison of a comprehensive set of locally relevant advantages deployed by the four MNBs studied. We introduce the concepts of global anchoring and local anchoring to make sense of the directionality of subsidiaries’ competitive advantages, and we explore their broad associations with subsidiaries’ commercial and financial performance. We conclude by discussing three theoretical lenses, situated at the intersection of the obstacle-oriented and advantage-oriented literatures, which can potentially account for the origins of competitive advantages in our sample, and we develop a series of propositions for future research.

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Section: Competitive Advantages In Multinational Bankingsupporting

confidence: 41%

“…In the context of the U.S. banking industry, Wu and Salomon (2017) find that foreign banks with higher-quality human capital and more host-country experience are less likely to face regulatory liabilities. In contrast, Rickley and Karim (2018) suggest that as institutional distance 1 3…”

Section: Foreign Investment Banks' Competitive Advantages In Relation...mentioning

confidence: 98%

Competitive Advantages in a Hostile, Regulated Environment: Four Multinational Banks in India

Caussat

2021

Manag Int Rev

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“…Moreover, MNE subsidiaries can leverage not only host-country experience but also experience gained from other countries (Regnér & Edman, 2014;Rickley & Karim, 2018). Wu and Salomon (2017) find that MNEs with third-country experience face fewer regulatory sanctions in a host country, while Perkins (2014) shows that prior regulatory experience in similar environments can significantly enhance their survival in host countries.…”

Section: Host-country Experience and Learningmentioning

confidence: 99%

Foreignness research in international business: Major streams and future directions

Xie

2021

J Int Bus Stud

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Foreignness has long been a central construct in international business research, with research streams examining its conceptualizations, manifestations, and consequences. Researchers started by taking foreignness to be a liability, then later considered the possibility of its being an asset. A still more recent view is that foreignness is an organizational identity that a firm can purposefully manage. Broadly conceived, foreignness is an umbrella construct that directly or tangentially covers research on country of origin, institutional distance, firm-specific advantages, and the ownership–location–internalization eclectic paradigm. We review the body of research on foreignness and track the evolution of its four streams, liability of foreignness, asset of foreignness, drivers of foreignness, and firm responses to foreignness. We call for a clearer conceptualization and a sounder theoretical grounding of the foreignness construct, more integration of the liability of foreignness and the asset of foreignness research streams, greater attention to the multiple strategies firms use to manage foreignness, and the extension of the field to less-explored contexts such as emerging economies, digitalization, and de-globalization.

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“…We recognize the potential benefits of regulatory institutional distance on innovation, but we believe those potential benefits will be eventually outplayed by its side effects: miscommunication and mutual misinterpretation. Especially, innovation is usually revealed in the form of tacit knowledge, which is unique to the organization, valuable, usually rare, and thus difficult to be transferred (Rickley & Karim, 2018). The level of difficulty will only be increased when regulatory institutional distance enlarges.…”

Section: Theoretical Background and Hypothesis Developmentmentioning

confidence: 99%

Regulatory institutional distance and the United States multinational corporations' research and development investment decisions

Nagaraj

Chao

2020

Thunderbird Intl Bus Rev

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Research and development (R&D) investment of multinational corporations (MNCs), as a part of MNCs' foreign direct investment (FDI) decision, has been studied for both the importance of the location for the MNC's strategy, and for the host country's benefits from the spillover effects of investment in R&D. The R&D investment decision is often influenced by the macroeconomic environment and the institutional framework of the host country. In this article, we argue that it is not just the level of regulatory institutions in the host country but also the regulatory institutional distance between the home and host countries that influences the R&D investment decision. We use the R&D expenditure data of U.S. majority owned firms' affiliates in various countries to analyze two things. First, we study the effect of regulatory institutional distance on the decision to invest in R&D in the host country. Second, we analyze if the regulatory institutional distance influences the intensity of R&D expenditure. We find significant empirical support for our hypotheses that underscores the importance of regulations for attracting R&D investments from MNCs.

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Managing institutional distance: Examining how firm-specific advantages impact foreign subsidiary CEO staffing

Cited by 35 publications

References 118 publications

Competitive Advantages in a Hostile, Regulated Environment: Four Multinational Banks in India

Competitive Advantages in a Hostile, Regulated Environment: Four Multinational Banks in India

Foreignness research in international business: Major streams and future directions

Regulatory institutional distance and the United States multinational corporations' research and development investment decisions

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