Why Do MNEs Engage in MNE-Government Relations? Empirical Evidence from the European Union and the Automotive Industry

Wagner, Sigrun M.

doi:10.1057/9781137277503_5

Cited by 3 publications

(2 citation statements)

References 45 publications

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“…and related legislation, or bringing forth business interests to the policymakers in joint seminars. A recent study found that one of the main motives for MNCs to establish relationships with host governments included information exchange and communication, as well as the promotion of business interests (Wagner 2013). These types of interactions typically require personal contacts with the authorities.…”

Section: Conceptual Framework On Firm-state Relationships: Bargainingmentioning

confidence: 99%

On MNC-Host Government Relations: How Finnish Firms Respond to National and Regional Policies in ASEAN

Kettunen

2017

cjas

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Combining literature from international political economy, international business, and institutional approaches to business studies, this article discusses foreign firms' relationship with the public sector in Southeast Asia. It focuses on the perceptions of the firms on host country policies toward foreign direct investments (FDI) and the impact of global financial crises and regional economic integration on the firms' strategies. The multinational company (MNC)-host government relationship is seen as a cooperative and continual bargaining within a specific institutional framework. Based on interviews with managers of subsidiaries originating from Finland, it is found that the regulatory environment of Association of Southeast Asian Nations (ASEAN) countries varies from easy to difficult with regard to policies, bureaucracy and protectionism. These pose institutional constraints for the firms, with additional economic constraints caused by global financial crises. Contrary to expectations, the ASEAN free trade agreement does not figure in the firms' investment strategies. This is explained by three findings: most of the firms serve the domestic host country market; the firms operate global rather than ASEAN-wide regional production chains; the firms represent industries that are not typical in Southeast Asian regional production networks.

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Section: Conceptual Framework On Firm-state Relationships: Bargainingmentioning

confidence: 99%

On MNC-Host Government Relations: How Finnish Firms Respond to National and Regional Policies in ASEAN

Kettunen

2017

cjas

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“…While interdependences in MNE-host governments' relationships exist in every industry (Eden & Molot, 2002;Kobrin, 1987;Luo, 2001Luo, , 2004Moran, 1974;Nebus & Rufin, 2010;Shirodkar & Mohr, 2015;Vivoda, 2009Vivoda, , 2011Wagner, 2013), they are amplified in the specific case of infrastructure industries. Multinationals from these industries and local governments certainly maintain an interdependent relationship, as the profitability of the subsidiary is conditioned by the commitments made by both parties.…”

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Power transitions in the host country and the survival of subsidiaries in infrastructure industries

Fernández‐Méndez

Canal

Guillén

2018

Global Strategy Journal

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Research Summary We argue that for firms competing in infrastructure industries, a change in the government that granted the permission to invest in the host country increases the likelihood of divestment of foreign subsidiaries. The logic surrounding this behavior lies in the fact that these firms may develop cooperative relationships with the granting government and that a power transition depreciates the relational capital accumulated and the effectiveness of the commitments achieved. Building on the literature on relational governance and the relational view of corporate political actions, we argue that this effect increases with host country governmental discretion and with investment longevity. An empirical analysis of the survival of foreign investments made by Spanish firms from infrastructure industries during the period 1986 to 2008 provides support for our hypotheses. Managerial Summary The aim of this article is to analyze how changes in the host government that granted the investment in the host country influence firms’ foreign subsidiaries’ survival in the case of firms competing in infrastructure industries. We found that for firms in these industries, power transitions in the host country erode the cooperative relationship they may have with the granting government, increasing the probability of firms' foreign subsidiary divestiture. In addition, we identify two factors that make this effect greater: the length of operation of the foreign subsidiary and host country governmental discretion.

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Assessment of the Role of MNCs in the Process of Manufacturing Industry Globalization

Pekarskienė

Susniene

Saboniene

et al. 2019

Eurasian Studies in Business and Economics

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Why Do MNEs Engage in MNE-Government Relations? Empirical Evidence from the European Union and the Automotive Industry

Cited by 3 publications

References 45 publications

On MNC-Host Government Relations: How Finnish Firms Respond to National and Regional Policies in ASEAN

On MNC-Host Government Relations: How Finnish Firms Respond to National and Regional Policies in ASEAN

Power transitions in the host country and the survival of subsidiaries in infrastructure industries

Assessment of the Role of MNCs in the Process of Manufacturing Industry Globalization

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