Dear friends and colleagues,  

You can find the second issue of Global Strategy Journal in 2021 at . It contains a series of articles studying the influence of the government and stakeholders on global strategy. Together, they provide an encompassing view of the latest thinking on global non-market strategy. We hope that you find them insightful! 

If you are interested in the articles forthcoming at GSJ, they appear here 

As always, we look forward to receiving your best work for consideration for publication.  

Best wishes,  

Gabriel R. G. Benito, Alvaro Cuervo-Cazurra, and Ram Mudambi 

Co-editors of Global Strategy Journal 

Institutional differences and arbitration mechanisms in international joint ventures 

Shivaram Devarakonda, Elko Klijn, Jeffrey Reuer, Valérie Duplat 

We theoretically and empirically study the effects of legal institutions on the inclusion of arbitration provisions in international joint venture (IJV) contracts. Legal institutions offer a public trilateral forum to handle interpartner disputes. However, these institutions function differently across countries, which can impede IJV partners from resolving disputes effectively through court systems. Alternatively, partners can take advantage of private trilateral resolution mechanisms in the form of arbitration. We argue and demonstrate that differences among partners' home country legal institutions regarding the legal traditions, as well as the importance of procedures and costs imposed in these countries for enforcing contracts, increase the likelihood of choosing arbitration over litigation. We also compare results for partners' recourse to IJV boards as a private, bilateral means of addressing conflicts. 


Political risks and foreign direct investments by multinational corporations: A reference point approach 

Naoki Yasuda, Masaaki Kotabe 

The purpose of this study is to develop a behavioral framework for management decision-making under bounded rationality to analyze foreign direct investments and political risks in host countries. This study shows that managers construct reference points on political risks and assess actual political risks in host countries relative to these reference points. This study considers that the political risk reference point is a mental map made up of (a) perceived political risks in host countries where multinational corporations (MNCs) operate and (b) home country political risks. We find that MNCs interpret political risks in host countries as opportunities (threats) if the political risks are below (above) their reference points. Our study provides a significant contribution to the literature on microfoundations of location strategy. 


Firm–government relationships: A social exchange view of corporate tax compliance 

Seung-Hyun Lee, Omer N. Gokalp, Jinsil Kim 

The economic exchange view of corporate tax compliance holds that when governments fail to provide adequate public services, firms comply less with taxes as quid pro quo. However, firms differ widely in the degree to which they respond to government inefficiencies in the form of tax noncompliance. We argue that such heterogeneity is largely because firm–government economic exchanges do not happen in a vacuum, but rather within the context of social exchange. Factors such as bribery, tax compliance burden, and consistency of tax enforcement affect firms' perceptions of fairness and trust in the social contract and moderate the quid pro quo in the economic exchange. We find broad support for our hypotheses in a sample from transition economies in Eastern Europe and Central Asia. 


The pressure behind corporate social performance: Ownership and institutional configurations 

Kurt Desender, Mircea Epure 

Drawing on the “varieties of capitalism” literature, we develop an actor-centered framework that explains firm-level corporate social performance (CSP) by emphasizing the importance of considering owners' and other stakeholders' motives toward CSP—which can be instrumental, relational or moral—and their salience in the national institutional setting. Results from an international panel show that investment company (government) ownership has a stronger negative (positive) relationship with CSP in liberal markets, in which owners are the key stakeholder, as compared to coordinated markets, which counterbalance the interests of multiple stakeholders. Family and company ownership have weaker links to CSP across institutional settings. We discuss implications for research and practice and argue that CSP policies may hold more relevance in liberal rather than coordinated market economies. 


Do international and product diversification strategies affect human rights and employee orientation disclosures? An across-country empirical study of large multinational enterprises 

Rakesh B. Sambharya, Irene Goll 

This study examines the relationships between market strategies (international diversification and product diversification) and nonmarket strategies (human rights and employee orientation disclosures) in 335 largest global companies from 31 countries. Hypotheses generated from the Institutional and Stakeholder theoretical perspectives proposed two alternative nonmonotonic relationships (an inverted U-shape and a U-shape) between market and nonmarket strategies. Data on company human rights and employee disclosures were collected from the Annual Reports of the MNE's parent company. The results of Generalized Least Square (GLS) regressions generally support both hypothesized nonmonotonic relationships and the results vary by region (Europe, the Anglo-Saxon cluster, and Asia and emerging markets). 


Levels of legitimacy development in internationalization: Multinational enterprise and civil society interplay in institutional void 

Mohammad B. Rana, Olav J. Sørensen 

Typically, studies on subsidiary legitimation take the perspectives of compliance and isomorphism to examine multinational enterprises (MNEs') legitimacy; our study considers both isomorphism and institutional innovation perspectives to examine how subsidiaries, in collaboration with civil society actors, co-develop various levels (degrees) of legitimacy in an institutional void. The study finds four overlapping levels of legitimacy—“acceptance,” “image,” “endorsement,” and “synergy” (a combination of acceptance and efficiency)—that subsidiaries co-develop throughout the internationalization process. We bring new insight into legitimation: that an isomorphism perspective of legitimacy alone cannot explain the complexity of subsidiary legitimation in an institutional void because subsidiaries not only earn acceptance by compliance, but also create/co-create image, endorsement, and synergy as outputs of institutional innovation. We contribute to the global strategic management in emerging economies. 


Signaling legitimacy across institutional contexts—The intermediary role of corporate social responsibility rating agencies 

Julian F. Kölbel, Timo Busch 

Good corporate social responsibility (CSR) ratings can increase a firm's legitimacy and reduce its default risk. Yet, the interpretation of CSR varies between different countries. We investigate whether CSR ratings have a risk-mitigating effect across different institutional contexts. We find that good CSR ratings have a general risk-mitigating effect. Yet, we also find that the effect decreases when the rating agency is embedded in the institutional context of its home country and the rated firm operates in a country with a different culture or regulatory system. This suggests that a rating agency's country of origin and its embeddedness in that country's context play an important role in the relationship between CSR ratings and default risk. 



  Professor, International Business and Strategy, Northeastern University 

   Co-editor, Global Strategy Journal   

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