The focus is on cross-sectional dependence in panel trade flow models. We propose alternative specifications for modeling time invariant factors such as socio-cultural indicator variables, e.g., common language and currency. These are typically treated as a source of heterogeneity eliminated using fixed effects transformations, but we find evidence of cross-sectional dependence after eliminating country-specific effects. These findings suggest use of alternative simultaneous dependence model specifications that accommodate cross-sectional dependence, which we set forth along with Bayesian estimation methods. Ignoring cross-sectional dependence implies biased estimates from panel trade flow models that rely on fixed effects. / Series: Working Papers in Regional Science

In the realm of globalization, international sourcing of services contributes to reshape firm’s value chains as the physical dispersion of these activities increases. This reorganization does not simply lead to the replication of domestic activities in a destination providing resource advantages, but, in most cases, it implies profound modifications of the flows of activities, including the reconsideration of the boundaries of the firm. Global sourcing strategies, also called offshoring, seek to increase firm’s efficiency by combining the exploitation of foreign locational advantages with process redesign. When aggregated, these firm-level strategies translate into considerable international exchanges to a point that flows of intermediate services represent about 73% of the total of international trade in services for 2005 (OECD, 2009). These activities present a high degree of heterogeneity in terms of functions concerned, the related domestic industries, motivations, destinations, organizational structure or scope. This wave of internationalization, because of its relative novelty, growth and rapid diversification, draws the interest from the public, political and academic spheres but the comprehension of the determinants shaping the configuration and organization of these activities still remain largely unknown. Based on four essays, this PhD thesis addresses the impact of host-country characteristics and distance factors on the configuration of international sourcing activities in the dimensions of location, governance model and scope of activities.<p><p>The first paper studies the country-specific determinants of the interdependent choices of destination and governance model in the global sourcing of services. I explore the simultaneity of these decisions and I jointly estimate their determinants using implementation-level data. Derived from comparative advantages, host-country uncertainty and the global dispersion of tasks, I present three classes of factors driving global sourcing configurations: resource arbitrages, host-country risk and communication barriers. Empirical results confirm that locations with resource or capabilities advantages specific to services – low labour cost, education and labour supply – attract more offshoring activities. However the pursued resource advantages differ depending on the governance model. Country attractiveness for captive implementations presents a higher positive sensitivity to the education-intensive resources, while outsourcing strategies have a greater cost-cutting orientation coming from labour cost arbitrages. Furthermore, the risks inherent to the host-country, in the form of weak formal institutions and inexperience in the destination, have the dual effect of deterring location attractiveness, while they foster the adoption of the outsourcing model compared to the captive one. Communication barriers coming from geographic distance, cultural and linguistic differences have the simultaneous effect of discouraging global sourcing in those locations while, to overcome these constraints, firms favor higher integration with the use of captive models. <p><p>This second paper further explores the mechanisms through which home-host country distances affect the choice of governance mode in service offshoring. Using a Transaction Cost Economics approach, I explore the comparative costs of the hierarchical and contractual models to show that different dimensions of distance (geographic, cultural and institutional), because they generate different types of uncertainties, impact offshore governance choices in different ways. Empirical results confirm that, on the one hand, firms are more likely to respond to internal uncertainties resulting from geographic and cultural distance by leveraging the internal controls and collaboration mechanisms of a captive offshore service center. On the other hand, they tend to respond to external uncertainties resulting from institutional distance by limiting their foreign commitment and leveraging the resources and local experience of third party service providers. Finally, I find that the temporal distance component (time zone difference) of geographical dispersion between onshore and offshore countries plays a dominant role over the spatial distance component.<p><p>The third section then concentrates on the impact of the institutional environment (regulative) on international sourcing activities. To exploit country-specific advantages, firms that source activities from abroad are forced to integrate the institutional environment into the choice not only of host-country, but also of governance model for their offshore activities. Considering inefficient institutions as drivers of transaction costs, this conceptual paper explores the impact of the host-country regulative environment in the interdependent decisions of country selection and governance model (captive or outsourcing) in firms’ global sourcing strategies. I consider two classes of assets: transferred assets for knowledge/information flows, and local assets sourced from the host location. I show that each class involves specific institutional risks for offshoring practices. In turn, because of the different institutional exposures of the captive model and the outsourced one, the institutional risks associated with transferred and local assets have different implications for the choice of governance model. Firms react to institutional risks relative to transferred assets by internalizing their activity, but they bypass inefficient institutions for local assets using outsourcing. Based on the interaction of the institutional risks relative to each class of assets, I then obtain sufficient conditions that give the firm-optimal combinations of country selection and governance model.<p><p>The last section studies how firm-level and country-level risks affect the scope of the process operated in the foreign unit. To prevent appropriation hazard for proprietary content, firms choose a particular disaggregation of the value chain. We argue that, in response to the lack of control offered by internalization and the lack of protection provided by host-country institutions for protecting proprietary content, firms reduce the scope of their activities. In other words, they exploit existing complementarities between the tasks of their value chain using a higher disaggregation of their process and therefore reducing appropriation value for outsiders. Based on a sample of 750 international sourcing projects, regression results on the scope of offshore activities confirm that firms prefer to source discrete tasks rather than entire processes when they lack the protection of internalization and external institutions. In addition, experience modifies these relationships. On the one hand, inexperienced firms do not rely on this slicing mechanism to prevent the loss of control implied by an outsourcing model. On the other hand, the effect of weak institutional protection is perceived as more stringent for inexperienced firms. When host-country institutions are deficient, these firms, compared to the experienced ones, have a higher propensity to operate discrete tasks rather than entire processes.<p> / Doctorat en Sciences économiques et de gestion / info:eu-repo/semantics/nonPublished

La présence des acquéreurs étrangers dans le capital des sociétés cotées soulève de nombreuses questions au niveau de la recherche académique. Les études menées jusqu’à présent sont rarement concluantes quant à l’effet réel des investisseurs étrangers sur la performance des sociétés cibles. C’est la raison pour laquelle nous avons voulu appréhender l’incidence de la nationalité des acquéreurs à la lumière des théories de la gouvernance d’entreprise. En nous basant sur une approche synthétique de la gouvernance d’entreprise, d’une part, nous avons cherché à comprendre les changements apportés par l’acquéreur étranger au niveau de la gouvernance disciplinaire : changement au niveau de la taille, indépendance, cumul des fonctions, présence et présidence du conseil d’administration ; d’autre part, nous nous sommes intéressés, via l’approche cognitive, aux différences culturelles comme amplificateur des coûts cognitifs. Notre étude a porté sur les acquisitions effectuées aux États-Unis, sur la période 1994 à 2008, par des acquéreurs étrangers ou américains. Les acquéreurs étrangers considérés sont les acquéreurs français, allemands et japonais.Nos résultats montrent que le niveau d’implication des acquéreurs étrangers, dans la gouvernance de la cible, se traduit par des changements différents. Quant à la dimension cognitive, la distance culturelle entre les deux partenaires et le départ du top management, influencent la performance de la cible. Nous avons trouvé, également, que l’acquéreur domestique (américain) a un effet plus favorable sur la performance, comparativement aux acquéreurs étrangers considérés dans notre étude. Au niveau des nationalités, nous montrons que les acquéreurs de nationalité japonaise influencent négativement la performance de leurs cibles. Les acquéreurs français sont ceux qui procèdent le plus à des changements au niveau de la gouvernance disciplinaire ainsi qu’au niveau de la dimension cognitive avec un transfert de connaissances plus important vers les cibles. / The presence of foreign acquirers in the capital of listed companies raises many questions for academic research. The studies that have been conducted to date rarely generate conclusive findings about the impact of foreign investors on the performance of listed targets. This is why we sought to get a better understanding of the role of the nationality of acquirers in the light of theories of corporate governance. Based on a synthetic approach to corporate governance, we have sought to understand, on the one hand, changes brought by the foreign acquirer in the corporate governance system of the target firm under the disciplinary view : change in size, independence, CEO duality, presence and chair of the board of directors; on the other hand, we examined, under the cognitive approach, the cultural differences as an amplifier of cognitive costs. Our study focuses on acquisitions in the United States over the period 1994-2008, carried out by foreign or domestic acquirers. The foreign acquirers considered in our study are the French, German and Japanese acquirers.Our results show that the level of involvement of foreign acquirers in the corporate governance of the target, results in various changes in the corporate governance of the target firms. Our results suggest also, for the cognitive dimension of corporate governance, that the cultural distance between the two partners and the departure of top management, influence the performance of the target firms. We found also that the domestic acquirers (U.S acquirers) improve performance of the target firms after acquisition more than foreign acquirers considered in our study. In terms of nationalities, we show that the acquirers of Japanese nationality influence negatively the performance of their targets. The French acquirers are the ones who brought the most important changes into the disciplinary governance ; at the cognitive governance level, they implement an important transfer of knowledge to their targets firms.

This thesis employs a random effects panel estimator to assess the relationship between Swedish outward foreign direct investment (FDI) stock and cultural distance for a panel of 75 countries covering the period 1998–2012. Cultural distance, operationalized by differences in Schwartz cultural orientations and gender equality, adds to the liability of foreignness and is hypothesized to have a negative impact on outward FDI stock. The theoretical underpinning for the hypothesis is based on a gravity model adapted to FDI, which shows that distance between countries reduces the amount of FDI that takes place between them. The results from the analysis provide partial support for the hypothesis as differences in some of Schwartz cultural orientations (harmony, embeddedness and egalitarianism) have a significant and negative effect on Swedish firms´ outward FDI stock. Moreover, differences in women´s economic rights are positively related to FDI, while no significant effects are found for differences in share of women in parliament.

Information technology outsourcing (ITO) can be defined as “the commissioning of a third party (or a number of third parties) to manage a client organization’s IT assets, people, and/or activities […] to required results” (Fitzgerald and Willcocks, 1994). It has been a pivotal topic on Chief Information Officers’ (CIO) agendas ever since Eastman Kodak’s decision to hand over their information systems function to IBM, DEC, Anderson Consulting, and Businessland in 1989. Never before had such a wellknown company that considered IT as a strategic asset handed over responsibility for it to an external partner (Applegate, 1992). The deal showed that ITO can constitute an alternative to managing complex Information Technology (IT) systems in-house (Kern and Willcocks, 2000) and subsequently led executives across different industries to follow suit and sign large contracts worth multiple hundred million dollars. The “Kodak effect” served as a starting point to what would become an important strategic matter for IT managers to consider (Caldwell, 1994). 30 years later, ITO has developed into a common practice for organizations of all sizes, industries, and geographies (Qi and Chau, 2013). Over the course of three decades, practitioners have come to appreciate ITO especially for its advantages in terms of cost, flexibility, and the possibility to capitalize on external capabilities (Martins et al., 2015; Schneider and Sunyaev, 2016). Today, virtually every Fortune 500 company2 and many large public institutions outsource a significant portion of their IT services (Patil and Wongsurawat, 2015). As a consequence, an entire global industry has evolved around ITO, with annual growth rates of around 10% and an estimated market size of around 320 billion US dollars in 2015 (Faisal and Raza, 2016). The increasing relevance of ITO in practice has also attracted considerable research that has explored various aspects of outsourcing, including common motivations, outcomes, success factors, benefits, and risks (Dibbern et al., 2004; Gonzalez et al., 2006; Lacity et al., 2009; Lacity et al., 2010; Lacity et al., 2016; Liang et al., 2015). Notwithstanding its three decades of existence, however, ITO remains a dynamic phenomenon that is subject to the ongoing rapid developments in the economic and societal environment in which it is embedded. Major developments in the field of IT, particularly the ever-progressing digitalization and the rise of IT-centered and -enabled business models (Bughin et al., 2019; Harvey Nash/KPMG, 2018; Legner et al., 2017), require adequate consideration in IT sourcing decision-making.

In South Africa Multinational Enterprises (MNEs) have to contend with the typical adversarial relations with a host government. In addition, MNEs operate in an environment regulated by a government policy of Redress, aimed at changing the wealth profile of the country to reflect the ethnic demographics. Policies such as Broad Based Black Economic Empowerment, Affirmative Action and Preferential Procurement are interventionist and place additional burden on the MNEs. Implementations of these regulations are often the source of conflict between MNEs and the local government. Ethno-cultural distance aggravates the strained relations between the MNE and host government. The policy of Redress effectively legislates the incorporation of local third parties that are ethno-culturally related to government into the competitive strategies of MNEs. Joint ventures with locals are an acknowledged strategy to enter foreign markets, providing for legitimisation and access to networks. The choice in strategy when dealing with the home government of either a relational or transactional approach is transferable to the MNE host government environment. Political levels have proven to be inaccessible but successful business transactions with government are abundant. The transactional approach dominates as a result of the failure to establish any relations with the host government, negating the pursuit of the relational approach. Third parties play an enabling role in successful transactions, ranging from providing access to government employees up to securing the deal and transacting with the MNE at arms-length. The absence of any social capital in successful transactions requires re-evaluation of the role of social capital in bridging barriers in business relations. Possible explanations are in the linking that the social capital of the third party with the government and MNE employees respectively has, an extremely low threshold for social capital in successful transactions, the force exerted by the need for the products or services, or, most probable, the profit motive. The distance between the government and MNE is extreme as a result of the historical strife between the ethnic groups in the country and the policy of Redress. The connotation with the social environment deters the active pursuit of social capital to gain competitive advantage. / D.B.L.

This dissertation investigates emerging multinational enterprises (EMNEs)’s acquisitions of firms in developed economies (DE) through three distinctive but interrelated essays. Despite costs EMNEs must offset from the obvious cultural distance (CD) they encounter with limited exploitable advantages, EMNEs have continued to aggressively acquire firms in DE, suggesting there are ways for the EMNEs to effectively overcome CD. In Essay 1, using insights from the symbolic interaction paradigm in sociology, I developed the Dynamic Socio-Cultural Model (DSCM), to uncover the general process of cultural creation and change. At the core of the DSCM is the process of collective learning and adaptive interaction in every social system. Viewing EMNEs’ acquisitions in DE as a cultural event that leads to new shared cultural resources, DSCM shows culture is not as rigid as was typically conceptualized in the cross-cultural management literature. While the negative effect of CD may initially impede EMNEs, CD may be positively moderated by certain conditions of the involved cultures. In Essay 2, I extended DSCM and combined it with insights from the organizational learning literature to focus on EMNE’s choices of control mode and their performance implications. Performing event study and endogenous switching regression on 1157 EMNE’s acquisitions in 21 advanced economies, I found EMNEs have, on average, a positive post-acquisition performance. I also found being an EMNE from an emerging economy that underwent rapid industrialization and targeting a high-tech firm increases the probability for choosing a low-control mode. Moreover, EMNE acquirers choose control mode by strategically considering their unique characteristics to optimize performance. In Essay 3, using the same theoretical approach, I examined the target firms’ sources of value creation. Applying an event study on 167 acquisitions in North America made by EMNEs from 11 countries, I found EMNEs’ partial acquisitions in DE generate, on average, a positive target’s cumulative abnormal returns (CAR). There is also empirical support for several determinants of target’s value creation and moderation effects. In particular, I found target’s international experience attenuates the negative effect of CD on target CAR, while acquirer’s state-owned status exacerbates it. Overall, the three essays collectively contribute to research streams in EMNEs, seller’s view of M&A, and cultural change.

<p>As the Chinese rate of growth has accelerated, China is increasingly considered as an important market for a diverse range of goods and services, including the advancedand complex. This has caught the attention of foreign firms in general and Swedish multinational companies in particular (Demir & Söderman 2007). This thesis focuses on a Chinese perspective of Chinese partners' decision making in SFJV, which is lacking in previous research. Six variables which are related to Chinese partners'decision making in SFJV are founded on a theoretical background. Then these six variables are compiled into a Chinese partners' decision making model. Each of these six variables is further divided into several factors. Data is then collect by a case study in which several SFJVs and their Chinese parents-Chinese partners are interviewed.This data is later used to verify and improve the original model which is founded on theoretical background. Finally an updated Chinese partners' decision making modelis created. The thesis concludes with the important findings and a discussion of the applicability of this model, contribution of the research, and future possible research orientation.</p>

Objective: The papers objective is to create a deeper understanding for whether or not cultural and psychic distance affects corporate establishments in the EU. Method: The results have been gathered through intense data collection through interviews with ScaniaAB and Business Sweden. There has also been extensive research of 36 different companies and their first establishments in different countries. We have then analyzed the results through cultural and psychic distance and through Uppsala University's internationalization process model. Conclusion: The conclusions of this paper are: Corporate establishment often occurs in neighboring countries because of the similarity to the domestic markets which contribute with a greater security. Since the introduction of the EU single market, corporate establishments have become easier within the single market. The cultural and psychic distance does exist within the EU, however the internal market decreases these distances and the impact on corporate establishments. The market commitment is essential to the corporates survival within the new market. Cultural and psychic distance affects small firms more often since their lack of network and experience. Cultural and psychic distances are two different but related phenomena.

As the Chinese rate of growth has accelerated, China is increasingly considered as an important market for a diverse range of goods and services, including the advancedand complex. This has caught the attention of foreign firms in general and Swedish multinational companies in particular (Demir &amp; Söderman 2007). This thesis focuses on a Chinese perspective of Chinese partners' decision making in SFJV, which is lacking in previous research. Six variables which are related to Chinese partners'decision making in SFJV are founded on a theoretical background. Then these six variables are compiled into a Chinese partners' decision making model. Each of these six variables is further divided into several factors. Data is then collect by a case study in which several SFJVs and their Chinese parents-Chinese partners are interviewed.This data is later used to verify and improve the original model which is founded on theoretical background. Finally an updated Chinese partners' decision making modelis created. The thesis concludes with the important findings and a discussion of the applicability of this model, contribution of the research, and future possible research orientation.