Why Does MNE Performance Vary Across Countries? An Inquiry Into The Competitive Value Of MNE Assets

In this assignment you are asked to write a critical review of an academic journal article that is on a topic related to International Business Management

Please read Getting Critical, by Kate Williams: Williams, K. 2009. Getting Critical. Oxford Brookers University, UK

Preparing your review:

.A key question to ask yourself: What are the main strengths and weaknesses of the journal article?

.When first reading through the article, consider the author's intentions and whether or not you think those intentions were successfully realised.

As you become more familiar with the journal article, consider the following:

What is the author's purpose? To survey and summarize research on a topic? To present an argument that builds on past research? To refute another writer's argument?

Does the author define important terms?

Assets of MNEs

“Why does MNE performance vary across countries? An inquiry into the competitive value of MNE assets”

Name of the author (s): Marina Carnevale, Lilac Nachum, HelaineKorn

Full title of the article: “Why does MNE performance vary across countries? An inquiry into the competitive value of MNE assets”

Full title of journal: International Business Review

Year of publication: 2017

Carnevale, M., Nachum, L. and Korn, H. (2017) ‘Why does MNE performance vary across countries? An inquiry into the competitive value of MNE assets’. International Business Review. Vol. 26 (1), pp. 1196-1207

In this essay, authors Carnevale, Nachum and Korn (2017), argued that the study of the performances of MNEs differ in different countries with the variation of assets that are available locally based on a critical study of the paper.

The research is a study of legal services MNEs of US competing with the domestic firms as well with MNEs outside the country.  From my point of view, the report is particularly concerned with three types of assets in national, domestic and international firms. The report derived from the research justify the focus of the article by signifying the resources of MNEs’ differs with the relation to contestants of distinctive nationalities and topographical scope, as well as sites. Morgan and Kristensen (2006), opines that the strategic orientation of MNE’s is a significant concern as the chief business strategy of the MNEs is to produce and supply goods and services that are globally standardized which in a turn will give the MNEs a logical aspiration for monitoring the performance of the subsidiary by levelling practices that facilitate the quantification of performance along diverse dimensions.

These variations derived from the reference to competitor’s locality and race recommends that the importance of MNE possessions is comparative and that the varied market situations across nations are an integral aspect of international competition, calling for equivalent setting and approaches. In the opinion of Bloom, Sadun and Reenan (2012), the purpose of this MNE performance is to evaluate and monitor certain strategic goals and application of corporate strategies in the subsidiary. The conceptualization of the article is based on two perceptions of the strategic management- the determination of the competitive value in relation to the competition and the variations in the competitive value occurs due to the presence of heterogeneity of the competitors within the industry.

The assets of MNE can be categorized into three broad classes. The first is the assets that are specified to firms. According to authors Bloom, Sadun and Reenen (2012), these assets originate in the ownership of registered imperceptible proficiencies that are portable within firms across countries. The second according to Contractor (2012), is the multi-nationality possessions that are derived from the capability to access capitals and knowledge from multiple nations and the flexibility to employ them in the creation of combined value (Carnevale et al 2017). Lastly, are the home-country assets which are established based on the resources that are derivable from the resources of the home country as opined by Dahl and Sorenson (2012). These three types of assets are distinctive in terms of their foundation, flexibility and uniqueness and all these three differences affect the economic value.

Competitive Value of MNE Assets

According to the opinion of author Adegbeasn (2009), in order to draw perceptions of theories of strategic management and contemporary developments in the RBV (Resource-Based-View), the article proposes that the competitive assessment of these assets will be determined by the uniqueness associated to the competition. Thus, it ensures that the economic value is not similar to the value possessed by the other competitors. These proposals in the view of the authors Chen and Miller (2012), discover hypothetical underneath in challenges theories where the heterogeneity among opponents within an industry is called as a prominent aspect of the competitive underlying forces among them. Another point is an industrial characteristic as identified by Boussebaa and Morgan (2012), worth mentioning is that the establishment of knowledge is necessary, which fundamentally rely on national legal systems, and creates the trans nationalization of observes more stimulating.

The importance of MNEs assets in describing a crucial competitive position of MNE’s are comparative to different groups of rivals and is considered as a clue of their reasonable cost. Economic situation is an apt indicator in that it facilitates the MNEs to study the value of assets in relation to opponent firms, in harmony with the MNEs vision of the opposition as shaping value. According to the opinion Dahl and Sorenson (2012), and Fabrizio and Thomas (2012), when there is rivalry with businesses of diverse nationalities, there are variation in the value of assets which is probable across the assets of the home-country. The price of the assets of home-country falls in the advantaged entrée of the firms that are nationalized and have a tendency to have the resources that are produced in their home-country. This enables them to operate them efficiently as the foundation for the enlargement of their own assets (Carnevale et al 2017). Firms that are overseas based are neither capable of associating with resources manufactured locally nor inferring their requirements and retort to them as effectually as it is done by national firms. Assets that are based on the resources of the home-country are therefore is of significant value in competing with the MNEs of other countries.

Since the different features of diverse firms are unique, the economic value of the assets that are firm-specific is improbable to modification while competing with organizations of diverse nationalities. Similarly, the assets that are multi-national are of restricted value in challenging MNEs of diverse nationalities since all the contributors are MNEs who are supposed to consume them. For firms within the same nationality, the competitive position of MNEs when compared with other firms of the similar nationalities other than their own is fixed by the assets of the home-country. All these taken together, the hypotheses of this article suggests that dissimilar assets or the similar assets with varying degrees are of comparative value in competition with different rivals MNEs both within and outside the country. Therefore, they deduce that alterations in MNE economic position are an integral element of international competition itself.

Empirical Analysis and Findings

The model that is implemented here is the empirical analysis based on a model that relates economic position comparative to respective competitor-groups as the reaction is flexible with the three types of MNE assets. In the opinion of Ramsey and Bahia (2013), it is necessary to mention the basis of performance measurement. In case of one MNE, it suggests the collection of participants required for examination of the theories, including MNEs of diverse nationalities and internal organizations challenging with each other in dissimilar nations (Carnevale et al 2017). In addition to that, although considerable alliance of the industry in current eras, the level of absorption is near to the ground if equated with additional industries in which global activity flourishes, on condition that a huge quantity of organizations for reflection (Buckley et al 2014). The professional requirements and certification processes of an industry professional is created by defining properly the limitations of the scope of the rivalry such that dynamics of competitive values can be calculated profoundly.

The hypotheses are examined by ways of cross-sectional time-series analysis. The consequences show noteworthy alterations across contestant groups, in support of the disagreement concerning the influence of heterogeneity of competitors on the competitive assessment of MNE assets. The outcomes of the regulator variables differ across different models, provided that the supplementary authorization for the unpredictable contributing factor of competitive position in relation to diverse contestants and in diverse localities (Rugman 2013).

Further, the theorization of the article is established on the supposition that home-country possessions are presented to all firms of a given nationality on equivalent terms (Carnevale et al 2017). Some firms relish monopoly governance over national resources, conferring them considerable benefit over other firms of the same nationality as mentioned by Hennart (2012).

The research proved that the assets of the business are highly utilizable depending on their foundation as the research clearly provides explanation with diagram and calculations. The results of the research are also consistent as it shows that it is important for all the firms to develop its business depending on the availability of assets.This research is although quite complex and intricate for small firms, it is helpful for the MNE that deals with international business concepts. Thus, the research article is mainly intended to the entrepreneurs with large business firms. Apart from this, the research presented in the article is logical and easy to follow except the mathematical calculations part. However, the language applied by the authors fulfills the objective of the research and is pretty professional.

Limitations of the Study

The findings and the conclusions of the journal is evaluated keeping in mind that there are quite a few caveats. As opined by Fabrizio and Thomas (2012), the probable interdependencies among the three types of MNE resources could trial the capability to discriminate their distinctive influence on the aftermath. For example, the assets of the home-country and the firm-specific assets are slightly correlated as firms have a tendency to grow firm-specific assets that replicate the resources of their home country. Additional researches are required to scrutinize whether the competitive value of MNE assets fluctuates across “global” versus “federal” law firms (Meyer and Peng 2016). Another drawback of the research is that it emphasis on US MNEs whose place is sturdy enough to outline the economic dynamics within the industry but it may not be completely appropriate to MNEs with feebler economic situations.

This article based their theorization on two perceptions of planned management concept, specifically that competitive value is determined in relation to the competition and that contestants within an industry are unrelated, and that this heterogeneity incorporates distinctions of value in opposition to them. A contemporary study found that these MNE businesses are the major suppliers to the budget excess in all innovative economies. Thus, the journal concludes by signifying the influence on the procedures of firms in other productions, via the facilities they deliver and emphasizes that the understanding of these organizations is indispensable to the study of cross-border commerce activities.

References

Adegbesan, J.A. (2009) ‘On the origins of competitive advantage: Strategic factor markets and heterogeneous resource complementarity’. Academy of management review, 34(3), pp.463-475.

Bloom, N., Sadun, R. and Van Reenen, J. (2012). ‘Americans do IT better: US multinationals and the productivity miracle’. The American Economic Review, 102(1), pp.167-201.

Boussebaa, M., Morgan, G. and Sturdy, A. (2012) ‘Constructing global firms? National, transnational and neocolonial effects in international management consultancies’. Organization Studies, 33(4), pp.465-486.

Buckley, P.J., Elia, S. and Kafouros, M. (2014). ‘Acquisitions by emerging market multinationals: Implications for firm performance. Journal of World Business’, 49(4), pp.611-632.

Carnevale, M., Nachum, L. and Korn, H. (2017). ‘Why does MNE performance vary across countries? An inquiry into the competitive value of MNE assets’. International Business Review. Vol. 26 (1), pp. 1196-1207

Chen, M.J. and Miller, D. (2012). ‘Competitive dynamics: Themes, trends, and a prospective research platform’. The Academy of Management Annals, 6(1), pp.135-210.

Contractor, F.J. (2012). ‘Why do multinational firms exist? A theory note about the effect of multinational expansion on performance and recent methodological critiques’. Global Strategy Journal, 2(4), pp.318-331.

Dahl, M.S. and Sorenson, O. (2012). ‘Home sweet home: Entrepreneurs' location choices and the performance of their ventures’. Management science, 58(6), pp.1059-1071.

Fabrizio, K.R. and Thomas, L.G. (2012). ‘The impact of local demand on innovation in a global industry’. Strategic Management Journal, 33(1), pp.42-64.

Hennart, J.F. (2012). ‘Emerging market multinationals and the theory of the multinational enterprise’. Global Strategy Journal, 2(3), pp.168-187.

Liu, X., Gao, L., Lu, J. and Lioliou, E. (2016). ‘Environmental risks, localization and the overseas subsidiary performance of MNEs from an emerging economy’. Journal of World Business, 51(3), pp.356-368.

Meyer, K.E. and Peng, M.W. (2016). ‘Theoretical foundations of emerging economy business research’. Journal of International Business Studies, 47(1), pp.3-22.

Morgan, G. and Kristensen, P.H. (2006). ‘The contested space of multinationals: Varieties of institutionalism, varieties of capitalism’. Human relations, 59(11), pp.1467-1490.

Ramsey, J.R. and Bahia, B.R. (2013) ‘How to determine subsidiary performance based on the internationalization strategy’. Journal of Management Policy and Practice, 14(1), p.11.

Rugman, A.M., (2013). ‘Multinationals in Canada: Theory, performance and economic impact’. Springer Science & Business Media.