The development of a data depository on firm-country distances and national markets Through data collection, analysis, and publishing, GLOB~S extends the informational resources for researchers, business, and government decision makers to understand the factors affecting foreign expansion and firm performance in foreign markets. We will be creating the following databases: a. Firm-country distances:Building on the country-level, longitudinal data for nine distance dimensions developed by Professor Berry and her co-authors (https://link.springer.com/article/10.1057/jibs.2010.28, ), we seek to provide data that reflects the country-specific factors that i) affect the ability of a given firm to enter into a specific market and ii) its foreign behavior and performance.
b. Economic reliance: Researchers studying business activity across national boundaries have struggled to find a measure that highlights the importance that a national market has within a firm’s operations. We are defining a logarithm-based measure of economic reliance, or the stake that a company has in each country, based on relative number of subsidiaries, employees, and sales of the firm across country markets. c. Market concentration: Reliable and comprehensive data at the international level on market concentration have been an elusive quest for strategy researchers. We are developing a measure based on the Herfindahl-Hirschman method to calculate an indicator of industry and national market concentration. This variable provides a normalized value of market concentration in 177 countries and their industries.
Rigorous, cutting-edge research collaborations and its transition to managerial and policy action: The following are example of on-going collaborative projects aimed at understanding firms’ competitive actions and behaviors across countries, the factors that affect organizational decision making in the context of large disasters, and the antecedents and implications of affiliations between multinational corporations and non-profit organizations: a. Uncertainty shocks and innovation
: Uncertainty shocks—exogenous, unpredictable and high-consequence hazards, such as natural disasters, terrorist attacks, and sudden changes in violent crime are an important and increasing source of exogenous uncertainty in the life of the business organization. Phenomena, such as natural disasters, terrorist attacks, financial crises, and political coups, disrupt national and international supply chains and inflict a direct damage to the human and capital resources of the firm. For the average multinational enterprise, exposure to systemic shocks is higher than for domestic firms and rising rapidly due to processes such as the internationalization of capital, global interdependencies, and urbanization. In this project, we study how exposure to systemic risks affect managers’ propensity to engage in risky behavior. For instance, organizations often exposed to systemic shocks may be comparatively tolerant to risk and opt into behavior that entail relatively prominent levels of uncertainty. We operationalize this behavior as the frequency of engagement in innovation. b. Global Product Integration within MNCs
:This project examines both the extent and direction of global product integration within multinational corporations across and within manufacturing industries. Building on a seminal paper by Steve Kobrin on global integration, we explore how product integration within industries evolves over time, considering overall levels of global product integration and transfer from parents to affiliates, affiliates to parents, and affiliates to affiliates. Moving beyond Kobrin’s cross sectional analysis from 1991 (using 1982 data), we have created time-varying industry level measures of global product integration using data from the Bureau of Economic Analysis (BEA). These measures are available from 1982 to 2014 and because they are at the industry level, we are able to share this longitudinal dataset with other researchers. c. The effects of uncertainty shocks on entrepreneurship:
The effects of uncertainty shocks on entrepreneurship are unknown. On the one hand, uncertainty shocks are associated with prominent levels of business mortality. The Federal Emergency Management Agency estimates that 40% of small businesses do not reopen after being hit by a natural disaster and 90% will fail within a year unless they can resume operations in less than a week and studies have shown that uncertainty shocks reduce output, employment, and productivity and suggest that business activity declines even in countries not directly hit by a disaster due to economic interdependencies. On the other hand, other studies suggest that uncertainty shocks may be beneficial to entrepreneurship. Building off the idea of ‘destructive creation,’ scholars have argued that uncertainty shocks may challenge established incumbents and open up opportunities for new business creation and radical innovation. This project seeks to resolve this debate through novel evidence on the relationship between uncertainty shocks, risk preferences, and entrepreneurship. We intend to explore three related research questions: a) How do uncertainty shocks affect both firm failure and founding, and therefore the overall level of entrepreneurship?; b) how do these effects differ across sub-populations of entrepreneurial firms (e.g., venture-backed vs. other firms, low-tech vs. high-tech industries)?; and c) what role do changing risk preferences play in driving these effects? d. Systemic risks, institutions, and market entry
: We build on the argument that low-probability, high-consequence shocks affect the market status quo and trigger changes of the national institutional environment. When national governments offer humanitarian aid to countries affected by shocks, their goodwill generate sudden changes in norms and beliefs among local stakeholders. This in turn reduces market barriers for firms conational to the responding government, which will be expanding to the focal country more often than during stable conditions. This benefit in the temporal reduction of the liability of foreignness will be greater for firms whose origin are countries that have high animosity with the disaster-affected country. e. The social value of firm-Non-Profit Organization collaborations:
How can corporations leverage the relative value of their own experience, versus that of non-profit organizations (NPOs), when tackling large-scale social issues? Specifically, can firms give more humanitarian aid in the aftermath of disasters by channeling resources through non-profit organizations (NPOs) or by implementing them on their own? We develop hypotheses on when the distinct experience of NPOs and firms yields greater aid and test them across 4,396 disasters affecting the world from 2003 to 2015.
Funger Hall, Suite 401 2201 G Street, N.W.
Washington, DC 20052