Dear friends and colleagues,
The second issue of Global Strategy Journal for 2022 is available at
https://onlinelibrary.wiley.com/toc/20425805/2022/12/2. In it, you can find a set of articles accepted in the regular submission process that provide the latest thinking on
the impact of the context on multinationals. The issue
opens with a global strategy collection on emerging market multinational enterprises (Pedersen & Tallman). We then have articles studying various dimensions of the impact of the international context on firms¡¯ strategies, such as informal institutions (Bu,
Luo, & Zhang), culture, economic and environmental conditions (Prieto-S¨¢nchez & Merino), cultural, social, and legal barriers (Leiblein, Larsen, & Pedersen), exchange rates (Fisch & Puhr), geography (Song), development (Williamson, Symeou, & Zyglidopoulos),
and institutions (Lopez-Vega & Lakemond)
For those interested in ownership, we have an open call for papers for a special issue on
Ownership and Global Strategy with a deadline of June 15, 2022. More details are available here:
If you want to read what is forthcoming at GSJ, please check it here
We look forward to receiving your best work for consideration for publication.
Gabriel R. G. Benito, Alvaro Cuervo-Cazurra, and Ram Mudambi
Co-editors of Global Strategy Journal
Torben Pedersen, Stephen Tallman
This first collection of articles for global strategy focuses on the relatively new phenomenon of Emerging Market Multinational Enterprises (EMNEs). The first topic to draw real attention to articles in
Global Strategy Journal, the study of EMNEs challenges many assumptions about what characteristics make a firm a successful MNE and forces a reconsideration of fundamental questions in strategic management. The articles in the collection provide a good
introduction to the topic, but there is much more research on the topic in a variety of journals for those scholars considering the EMNE as a topic for their own research.
Juan Bu, Yadong Luo, Huan Zhang
This study focuses on three prevalent societal issues¡ªcrime, corruption, and informal sector¡ªthat constitute the dark side of informal institutions in developing countries. We argue that the dark side of informal institutions has the potential to impede foreign
firms' desire and ability to commit to the host countries. The effects of these three forms on foreign firms differ depending on the type of local commitment. Analyzing the World Bank data of foreign firms in 36 developing countries, we find that (a) host
country corruption is stronger in deterring foreign firms' long-term investment, (b) host country informality is stronger in obstructing foreign firms' innovation output, and (c) host country crime is stronger in undermining foreign firms' production capacity
utilization. Our analysis also shows that host country's efficient regulatory institutions and foreign firms' non-market-seeking motive are two important countervailing forces that attenuate the negative effects of the dark side of informal institutions.
Carlos-Javier Prieto-S¨¢nchez, Fernando Merino
This paper examines the effect of key cultural and economic factors on the emergence of born-global (BG) companies. Such factors include the intentions and the growth aspirations of the entrepreneur, as well as the country's characteristics in terms of its
income per capita and the complexity of its economic system. The analysis also highlights how the environment affects the importance of the aspirations to be BG. Our work expands the literature on BGs in Latin America by analyzing macroeconomic aspects and
specific features of the entrepreneur and the environment as possible determinants of BG character. The results reveal that the entrepreneur's intentions and aspirations, along with environmental factors and the economic growth in Latin America, contribute
to a firm's probability of becoming a BG company.
Michael J. Leiblein, Marcus M. Larsen, Torben Pedersen
This article explores the relationship between organizational governance and location choices. While the existing literature provides significant intuition regarding the factors that influence these choices, it often assumes that governance and location choice
are independent from one another. This article tests the veracity of this assumption in the global semiconductor industry. We report evidence of significant correlations across choices regarding how to govern and where to locate production, evidence of a reciprocal
relationship between governance and location choices, and evidence suggesting how interdependence between governance and location choices affects the stability of relationships highlighted by extant theories. We conclude with implications for future theoretical
and empirical research based on the existence of these interdependent effects.
Jan Hendrik Fisch, Harald Puhr
Literature that compares the advantages of financial hedging and operational flexibility as instruments to manage exchange-rate uncertainty presents inconsistent results. This study addresses such inconsistencies in two ways. First, it clarifies that the effects
of financial hedging and operational flexibility are asymmetric. Financial hedging helps an MNC to reduce a negative effect of exchange-rate uncertainty on firm value, whereas operational flexibility allows an MNC to enhance a positive effect of exchange-rate
uncertainty on firm value. Second, the study demonstrates that these effects are contextual to the MNC's subsidiary network. Depending on whether exchange-rate correlation in the subsidiary network is positive or negative, either financial hedging or operational
flexibility is more effective than the other. Regressions on a sample of U.S. manufacturing firms support the predictions.
We extend the multinational operational flexibility literature by examining how the characteristics of resources and capabilities within a portfolio of international investments affect its downside risks. We postulate that non-location bound resources and capabilities
within an international investment portfolio are crucial to reducing switching costs and enhancing cross-country switchability, thus curbing downside risks. Our large sample of Korean multinational corporations reveals that globally sourced production inputs
or more technological capabilities help curb downside risks, while locally sourced inputs or more marketing capabilities do not. We additionally find that the positive effect of less locational boundness is more salient when the portfolio has a high product
relatedness or standardization.
Peter J. Williamson, Pavlos C. Symeou, Stelios Zyglidopoulos
This article examines how different international diversification strategies impact the legitimacy challenges multinationals face and the way they manage their corporate and social responsibilities. Analyzing these questions in a sample of companies in extractive
industries, we find that those who pursue resource-seeking investments that involve locating extraction operations overseas respond with the largest improvement in their corporate-level social performance (CSP). Those pursuing efficiency-seeking by establishing
processing subsidiaries abroad increase their CSP less, with the smallest increase for those pursuing market-seeking through marketing and sales operations overseas. For each type of activity established overseas, the increase in CSP becomes greater the more
developed the company's home country and the larger its international footprint, but is not dependent on the host country's level of development. These findings suggest that, in today's globalized world, the legitimacy challenges that result from subsidiaries'
activities increasingly need to be managed at a global, corporate level.
Henry Lopez-Vega, Nicolette Lakemond
This article explores EMNEs' innovation capability building in emerging markets. The paper provides a longitudinal account of how the Brazilian cosmetics firm Natura transitioned from scant to ample innovation resources and processes. Building on the institution-based
view and the resource-based view, we explain how EMNEs' innovation capability building is anchored in open innovation and collaborative nonmarket strategies. The paper reveals a unique pattern of innovation capability building based on a combination of local
and global open innovation processes and harnessing the country characteristics over time. It is shown how combining open innovation and collaborative nonmarket strategies can help mitigate weak formal and informal institutions in emerging markets. The study
offers an integrated framework explaining innovation capability building and the effects on the institutional setting.
Innovating for the Middle of the Pyramid in Emerging Countries. Cambridge University Press