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International business (IB) research on Asian firms is on the rise, challenging conventional theories and providing opportunities for IB researchers to address several paradoxical issues such as ownership advantage and risk-returns. The book focuses on IB research in Asia and addresses some of these problems in several keys areas of IB research.



International Business Research in Asia

1. International Business Research in Asia

Makino and Yiu (2013) have conducted a systematic literature search of Asian firm strategies published in eight top-tier management journals: Academy of Management Journal (AMJ), Academy of Management Review (AMR), Administrative Science Quarterly (ASQ), Journal of International Business Studies (JIBS), Journal of Management (JoM), Journal of Management Studies (JMS), Organizational Science (OrgSci) and Strategic Management Journal (SMJ). There were 228 articles published between 1980 and 2011, and among the abovementioned eight journals, JIBS and SMJ published 71% of the research on Asian firm strategies with 94 and 69 articles, respectively. In addition, JMS published 19 articles, AMJ and OrgSci each published 18, AMR and ASQ each published 4 and JoM published 2.
Shige Makino, T. S. Chan, Geng Cui

Multinationals and Organizational Management


2. A Test of Agency Costs in Strategic Alliances

The incidence rate of strategic alliances has accelerated in recent decades, and alliances have become one of the most important entry modes into foreign markets (Hergert and Morris, 1988; Glaister and Buckley, 1996; Nielsen, 2007). Earlier studies show that multinationals use alliances to enter the markets of countries that enforce restrictive conditions on foreign investments (Hood and Young, 1979). Later research shows an increase in firms voluntarily entering into alliances in response to changing, unpredictable, globalized competition. By participating in cooperative ventures, multinationals stabilize the flow of needed resources, smooth global operations and increase the speed at which they can enter new markets (Lavie and Miller, 2008). The fewer resource commitments required in alliances further allow firms to more flexibly hedge uncertainty in overseas investments, compared with alternative entry modes, such as mergers and acquisitions and wholly owned greenfields (Brouthers, Brouthers, and Werner, 2008). However, despite the purported advantages underlying alliances, empirical evidence shows that there are as many enterprises that succeed in their alliance engagements as those that fail to do so (e.g., Das, Sen and Sengupta, 1998; Ren, Gray and Kim, 2009). The presence of a mixture of outcomes suggests that realization of the purported advantages of alliances depends on how the associated costs are controlled.
Jung-Ho Lai, Sheng-Syan Chen, Shao-Chi Chang

3. What Drives the Strategic Alliance Formation of Transition Economy Small and Medium-Sized Enterprises?

The Moderating Role of Intermediary Organizations
Small and medium-sized enterprises (SMEs) are increasingly playing an important role in the economic development of many emerging economies, particularly as they gradually become more involved in global markets through various means of internationalization. While the institutional environments in these emerging economies have progressed significantly toward market economies in recent years, providing SMEs with many opportunities, there are still considerable challenges that constrain SMEs’ performance and growth. Many are pushed abroad as the result of discrimination in the domestic market. Given that the governments in many emerging economies are more interested in supporting large domestic and multinational firms through a variety of investment incentives, these ventures are at a great disadvantage in seeking resources in the domestic market.
Wiboon Kittilaksanawong, Xudong Chen, Chaoqun Duan

4. Global Firms Competing Locally: Management Localization and Subsidiary Performance in China

Firms face liability of foreignness and other disadvantages when operating in other countries. The pressure to engage in local isomorphism — that is, imitate the practices of domestic firms — can be great, especially in the case of large cultural distance from home (Salomon and Wu, 2012). Management localization, as a form of local isomorphism, has become an important issue in cross-national operations. In China, many foreign invested enterprises (FIEs) have embarked on the path to localize their management in the past two decades (Katrin, 1996; Keeley, 1999). As a formal and planned strategy, firms often set up a specific target and schedule for management localization. Aside from the need for cost containment, management localization is often discussed in the framework of the global integration vs. local responsiveness paradigm in an effort to balance the scale economy of global standardization with the local contingency that is necessary for success in overseas markets (Hannon et al., 1995; Prahalad and Doz, 1987). On the one hand, multinational corporations (MNCs) must efficiently transfer to the overseas subsidiaries their superior knowledge accumulated from successful operations at home and in other countries (Kogut and Zander, 1993). On the other hand, they face the risk that the knowledge may not apply to the local environment. While researchers emphasize the benefits of management localization in improving local responsiveness, its effect on subsidiary performance has been sparsely studied. A number of researchers find that the effect of management localization is not always straightforward and tends to be highly context-dependent (Lam and Yeung, 2010).
Geng Cui, T. S. Chan, Shengsheng Huang

5. The Influence of Culture on Budgetary Characteristics and Managerial Effectiveness: An Empirical Investigation of National and Multinational Companies in Thailand

Budgeting is the cornerstone of nearly all organizations’ management control systems (MCSs) but, despite its widespread use, it is far from perfect (Hansen, Otley and Van der Stdede, 2003). Phadoongsitthi (2003: 59) provided empirical evidence of the importance of budgeting as one of the keys to effective MCSs in organizations located in Thailand.
Saraphat Somboon, Joseph Aiyeku

International Business and FDI


6. Understanding the Entrepreneurial Process of Learning through Network Dynamics: Insights from China’s Young International Firms

Research in the field of international entrepreneurship (IE) has advanced the traditional process theory of internationalization by focusing on young firms that are international at their inception, or shortly thereafter (Knight and Cavusgil, 1996; Oviatt and McDougall, 1994). Empirical evidence has shown that despite lacking resources and experience, young entrepreneurial firms have the capability to internationalize proactively and rapidly (Rialp et al., 2005). Building on this line of research, Autio, Sapienza and Almeida (2000) introduce the concept of “learning advantages of newness” (LAN) as a theoretical foundation to explain the success of new venture internationalization.
Lianxi Zhou, Bradley R. Barnes, T. S. Chan

7. Does Social Capital Always Create Value for Firm Internationalization?

The Case of Chinese Automakers in Russia
An increasing number of firms from emerging markets are joining the global competition for consumers. To understand how these emerging-market firms compete for global consumers given their inherent disadvantages in brand recognition, proprietary technology and international management capabilities, existing studies have emphasized the positive role of social capital in their internationalization process. The literature on firm internationalization generally holds that social capital has a positive influence on firms’ international expansion, especially for emerging-market firms with weaker firm-specific core competencies. The study featured in this chapter argues that social capital as a firm resource does not have an ongoing positive influence. Beyond a certain point, the continuous over-reliance on social capital after the initial foreign entry might negatively affect the marketing of emerging-market firms’ products overseas. Based on a case study of independent private Chinese automakers’ dramatic rise and fall in the Russian market over the 2004–2009 period, this study demonstrates that while social capital in the form of business ties played a crucial role in facilitating Chinese automakers’ initial entry into the Russian market, the over-reliance on the same business ties also contributed significantly to the subsequent failure of these firms’ products in, and (in some cases) the eventual withdraw from, the Russian market.
Zejian Li, Yue Wang

8. Multinational Enterprise Strategy, Institutions, State Capacity and Inward Foreign Direct Investment into the ASEAN Countries

The role played by institutions in the closely related fields of international business and strategy has attracted increasing attention, with much of the motivation for such interest coming from the engagement of multinational enterprises (MNEs) in the diverse institutional environment of emerging economies from the Asia Pacific region (Peng et al., 2008; Chan et al., 2008; Rodriguez et al., 2005). Managers’ strategic decisions regarding entry mode and the associated foreign direct investment (FDI) are influenced by a range of institutional factors, including culture, legal certainty, political stability, governmental and market roles, treatment of property rights and degrees of perceived corruption. Strategic decision-making in unfamiliar and diverse environments is of central importance to MNEs investing in Asia, whether their motivation is the extension of global and regional supply chains or the desire to sell to consumers in the region. For MNEs, the region’s potential in both of these dimensions of inward investment is underpinned by the tension surrounding the contrasting attraction of a large population offering a workforce with relatively low wage costs in the midst of rising incomes for increasing numbers of consumers. MNEs compete in an environment of rivalry between regional states to attract FDI. The competition not only takes the form of overt incentives linked to location but is also, more subtly, a competition based on relative institutional strength and the soundness of institutional capacity in each country (Buckley, 2009; Dunning and Zhang, 2008;Peng et al., 2008).
Greg Mahony, Bilal Rafi

Marketing and Consumer Behavior


9. Cross-Cultural Research on Consumer Responses to Service Failure: A Critical Review

The service industry contributes significantly to global economic development and there has been a strong research effort to understand consumers’ perceptions of service quality and satisfaction. Although service performance is pivotal to consumer satisfaction in the service-delivery process, it is characterized by heterogeneity (Zeithaml, Parasuraman and Berry, 1990). Given this inherent variability, researchers have recognized that service failures are almost inevitable. Therefore understanding how consumers react to service failures, including what factors mitigate their dissatisfaction, has important theoretical and managerial implications for the service industry. Not surprisingly, issues of service failure and recovery have received considerable research attention in the service marketing field (e.g., Choi and Mattila, 2008; Hess, Ganesan and Klein, 2003; Kalamas, Laroche and Makdessian, 2008; Mattila, 2001; Mittal, Huppertz and Khare, 2008; Smith and Bolton, 2003; Smith, Bolton and Wagner, 1999; Witz and Mattila, 2004).
Lisa C. Wan, Maggie Y. Chu

10. Self-Discrepancy and Consumer Responses to Counterfeit Products

Counterfeiting is the production and sale of a fake product that is seemingly identical to an original brand-name product. International trade in counterfeit goods has shown a steady increase in the new millennium, totaling an estimated €475 billion a year, or nearly 8% of world trade (International Anti-counterfeiting Coalition, 2008). This increase in the buying and selling of counterfeit products continues to gain ground despite global efforts by governments, enforcement agents and intellectual property rights—holders to stop counterfeiting and piracy. The anti-counterfeiting forces seem to be fighting a losing a battle, as consumers often knowingly purchase counterfeits (Nia and Zaichkowsky, 2000). Therefore a clear and actionable understanding of the motivations underlying consumers’ purchase of counterfeits is necessary to influence counterfeit consumption behavior (Wilcox, Kim and Sen, 2009).
Ling Peng, Lisa C. Wan, Patrick S. Poon

11. Perceptions of Chinese and Indian Brand Personalities in Germany

The past decade has seen an increasing number of companies from emerging markets entering the international marketplace (Aulakh, 2007; Gammeltoft et al., 2010). In particular, many Chinese and Indian companies are going international (Alon et al., 2009; Hansen, 2009). Prominent examples include Haier and Lenovo from China, and Wipro and Infosys from India, all of which have evolved from small start-ups into multinational corporations (MNCs) within a period of less than 20 years (Jinsheng and Ye, 2003; Hamm, 2006; Zhijun, 2006; Kumar, 2009).
Heidi Kreppel, Dirk Holtbrügge


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