International Business

New industries, new types of firms and organizations, new types of people, and new nations are increasingly practicing international business, and are doing it in new ways and within new structures. The rapid change we witness in the types of international businesses, and in how they practice international business, continues unabated. This presents managerial challenges and new international competition for those doing it. For example, new global multinationals may not long have been SMEs (Small or Medium Enterprises), and many are emerging from countries that are only recently industrializing. Established MNEs (Multinational Enterprises) are doing business in entirely new ways, and are encountering new opportunities and difficulties. Those of us making sense of these trends may need new techniques and new theoretical frameworks.

Corruption and its implications in international business trading and investments represent an increasing interest for academicians. It is extremely important to understand how corruption affects economic growth directly, by shifting the allocation of public funds, and, indirectly, by changing the incentives, prices, and opportunities faced by entrepreneurs (Jain, 2002). Corruption refers to behaviour that violates the trust placed in public officials and serves to destabilize the basis on which generalized interpersonal trust relies and increases the risks faced by the entrepreneur (Anokhin and Schulze, 2009).

Over the last five decades, few topics have attracted the attention of both academics and business practitioners as much as the issue of CSR, which has been widely seen as the interplay between global and local legitimacies, shaping corporate structures and influencing decision processes (Gjølberg, 2009). A quick review of the top journals in international business and international management science reveal that CSR scholarship has taken different shapes and forms through the years, applying a wide range of theoretical frameworks. Academics and practitioners have approached the issue by applying different theoretical perspectives, placing small, medium or multinational companies at the centre of their studies.

In an ideal textbook world, the noble concept of sustainable development sounds less complex and more feasible to actualize. Nevertheless, the fierce scramble to appear socially responsible also involves sophisticated corporate ingenuity characterized by deviance (Cohen, 1966), which is aimed mostly at rent seeking without regard to social and environmental issues, especially in weaker institutions. Institutional theory has thus far proved very valuable in providing insights into the reasons why the rules of the international business game, with multinational companies (MNCs) as major players, are applied differently in different institutional environments, resulting in different outcomes. It is easier to identify the functions of institutions than the structure they should take in specific contexts. The available literature and conventional knowledge about institutions have mostly been developed in the West, where the judicial, socioeconomic and political systems are generally formalized, stable, advanced and diverse. From theory to practice, this has led to the general assumption that the first best practices of the West should also be easily enforceable elsewhere in the developing world (Rodrik, 2008). From the start of the millennium, however, economic crises and emerging opportunities have highlighted the importance of the developing economies (DEs). First, they are potential markets notwithstanding the fundamentally different challenges they pose. Secondly, the institutional structures underpinning the rules of the game for their sustainable development are susceptible to analysis using the ‘second best perspective’ (Rodrik, 2008).

Outward foreign direct investment (ODI) from emerging economies (EEs) in general, and from China in particular, has increased substantially. China took fifth place in generating global FDI outflows with USD 48 billion in 2009 (WIR, 2010). An increasing research effort has been devoted to examining issues related to Chinese MNEs. Previous research has mainly focused on the motivations and location choices of outward FDI by Chinese firms at both country and firm levels, and the factors influencing internationalization decision-making. Yet, less attention has been paid to factors challenging or even endangering the internationalization process of these latecomers in the global market.

In the past decade, China has posited Africa as one of the most important regions for carrying out its ‘go global’ strategy (Gu, 2005, p.8). The share of Chinese outward direct investment (ODI) flow to Africa increased from 2.62 per cent in 2003 to 9.82 per cent in 2008 (MOFCOM, 2009). Compared with Asia, Africa enjoyed a relatively small but strong growth rate of Chinese ODI flow (OECD, 2010). By the end of 2008, Africa has become the second largest recipient of Chinese ODI. Relative to a long-term low inflow of FDI from the global market to Africa (Naudé and Krugell, 2007), China’s proactive ODI strategy in the region is currently the subject of unprecedented attention (Large, 2008; Carmody, 2008; Carmody and Taylor, 2009).

Exporting is the foreign market entry mode most commonly adopted by firms in order to grow and develop in international markets, thanks to its lower costs, risks, and resource commitment. The existing studies in this field look at a range of issues from export-related barriers and strategies, to determinants of performance (Katsikeas et al., 2009). There is also complementary literature on: import-related stimuli (Katsikeas, 1998); importing problems (Katsikeas and Dalgic, 1995); relationships between the export and importer (Leonidou and Kaleka, 1998); and international and global purchasing activities (Leonidou, 1999). Being the ‘merchant’ between domestic manufacturers and foreign buyers, trading companies play a significant role in global business (Jones, 1998), supporting manufacturers’ exports (Peng and Ilinitch, 1998) and purchasing companies’ imports (Quintens, Matthyssens and Faes, 2005). The study of trading companies remains underdeveloped (Jones, 2000; Peng et al., 1998); in particular, the study of trading companies based in transition economies. The differences, in exporters’ characteristics and in the exporting channel from developed and developing countries (Das, 1994; Tesfom et al., 2004), plus the heterogeneity of trading companies logically suggests to a new trial of trading companies from one emerging economy, like China, which has the reputation of a distinct business mode and environment.

International business researchers have been interested in the choice of a company’s foreign operation mode since the 1960s (Hymer 1960, 1976), and there is good reason to conclude that this has become an established field of research (Benito et al., 2010; Werner 2002). Therefore, one might question whether there is really a need for another study on the subject. However, a review of the literature shows that, surprisingly, despite the quantity of prior research on the topic, it seems to be rather biased. For example, researchers seem to have concentrated their efforts on studying the company’s entry into a foreign market and the operation mode chosen, and to have paid significantly less attention to what happens after the entry has been made (Canabal and White 2008; Brouthers and Hennart 2007; Welch et al., 2007; Harzing, 2002).

At the beginning of the internet era in the 1990s, the hypothesis of a borderless world was put forward and profound changes in international business practices were imagined (for example, Quelch and Klein, 1996; Hamill, 1997). Hamill (1997, p.300) saw the internet as ‘a fundamentally different environment … and new international marketing paradigms may have to be developed to explain internationalization processes’.

The growth of research into ‘born-globals’ (Bell, 1995; Madsen and Servais, 1997) led to research that has expanded our knowledge of early internationalizing SMEs (Jones and Nummela, 2008). The literature has investigated the major drivers of the internationalization process of SMEs and the problems associated with fast growth in international markets (Chetty and Campbell-Hunt, 2003; Sujrez-Ortega, 2003). These drivers include: the role of learning; the transmission of knowledge; the acquisition and development of tangible and intangible resources; the acquiring of competencies and routines; the importance of social and relationship capital in the development of trust-based networks; and a host of industry and country-specific issues (Chetty and Blankenburg, 2000; Loane and Bell, 2006; Ojala, 2009; Zucchella et al., 2007). Many of the major drivers of the internationalization of SMEs embrace factors that are connected to the resource-based view of the internationalization process of SMEs (Westhead and Wright, 2001). There have been many empirical studies of the effects of the key resources that are thought to drive this process on the inter nationalization of SMEs (Andersson et al., 2004; Chetty and Blankenburg, 2000; Coviello and Munro, 1997; Knight et al., 2004). These studies have focused on different types of resource thought to effect the rapid internationalization of SMEs. There are few studies, however, based on large quantitative studies of the effect on performance of such resources.

Ever since Bott (1955) first presented the concept of social networks as a systematic way of understanding relationships in London families, social network researchers have observed and developed the idea of close-knit and loose-knit networks of relationships. This dichotomy has since become a well developed line of enquiry in both entrepreneurship and international entrepreneurship research. Network relationships between firms and individuals have a powerful influence on the internationalization of small high tech firms (Coviello, 2006; Moen et al., 2004; Oviatt and McDougall, 2005). Entrepreneurs’ social or interpersonal relationships make them aware of foreign market opportunities (Loane and Bell, 2006).

Managing complex cross-border collaborative projects (CCBC) is an important emerging research field relevant to both the theory and practice of international business (IB). Yet, as compared to the growing need for professionals in firms involved in such high stake multi-party projects, meagre attention has been given in IB education and literature to the associated managerial challenges involved in such new forms of organization. More specifically, given scant empirically corroborated insights, what are the key problems IB scholars and practitioners could address in developing a research agenda on CCBCs that is both managerially relevant and theoretically rigorous? This conversation is one between researchers with experience of working with practitioners, and some practitioners very experienced in managing CCBCs. In a public conference session chaired by Volker Mahnke, with an audience of practitioners and researchers, Tamer Cavusgil and Volker explored some of the salient problems managers face, and pinpointed rewarding research avenues for tackling the challenges in organizing multinational projects such as CCBCs. This is a lightly edited transcript of that interview.

This conversation is one between researchers with experience of working with practitioners, and some practitioners very experienced in the process of internationalization. In a public conference session chaired by Simon Harris, with an audience of practitioners and researchers, Pervez Ghauri explored a number of issues that are of current research interest, and we found them to be of significant practitioner interest as well. Here we present a lightly edited transcript of that interview.

Global technology alliances (GTAs) and innovation capabilities are the two main themes in this chapter. Drawing on innovation concepts and the resource-based view, this chapter explains how firms gain access to complementary resources, dispersed in the international realm, and incorporate these within their organizations through GTAs. This emergent form of international resource-seeking and network collaboration across borders can be seen as a new phenomenon in international business (IB) (Kogut and Zander, 1992; Rugman and D’Cruz, 2000; Yamin, 2011). Innovation capabilities can be attained by combining a firm’s technology resources with those of overseas alliance partners, offering progress towards enhancement of competitive advantage. From a theoretical aspect, we combine the resource-based view with innovation concepts, and comprehensively examine the dynamics of resources and innovation at both a firm and a network level.