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Cultural industries – systems of organizations that produce and distribute cultural goods with substantive symbolic, aesthetic, or artistic value – represent an important, exciting, and complex context that receives growing scholarly attention. As the first review of management research on cultural industries, this paper aims to provide a systematic synthesis of current research, summarizing distinctive characteristics of cultural industries and highlighting research gaps. We also illustrate how the unique nature, dynamics, and evolution of cultural industries provide opportunities to broaden international business theories in four research themes (i.e., internationalization strategy, cross-border innovation, social inclusion in the global economy, and emerging market research).

We study how global connectedness can help MNEs become more environmentally sustainable. Based on the idea that environmental sustainability requires dynamic capabilities, we define dynamic green capability as the ability to build complementary green competences and reconfigure organizationally embedded resources to pursue competitive advantage in a rapidly changing stakeholder environment. We argue that MNEs with greater global connectedness in terms of international diversification or international environmental certification possess knowledge advantages in cultivating dynamic green capabilities. We extend the sensing–seizing–reconfiguring framework and propose that global connectedness substitutes for sensing as a driver of seizing by providing direct access to relevant green knowledge pools around the world, and that it complements seizing as a driver of reconfiguring by strengthening the knowledge routines needed to integrate green competences.

We extend the internalization literature by theorizing on how public disclosure of corporate social irresponsibility (CSI) can damage reputation-based firm-specific advantages of multinational companies (MNCs) and how foreign subsidiary governance can subsequently be used as strategic responses. Specifically, we distinguish between two foreign subsidiary governance mechanisms – information control and ownership control – that the prior literature has often assumed operate in parallel, and posit that they function in divergent directions in this context. Furthermore, we explain how two host-country characteristics – press freedom and regulatory quality – amplify the need for MNCs to utilize different governance mechanisms as responses to CSI disclosure.

Organizations face a common intertemporal choice problem, where actions suitable in the shortterm are different from those that work in the longterm. Building on the organizational ambidexterity theory, we argue that organizations can reconcile their short‐term and long‐term tensions, but this does necessitate managerial endeavours that orchestrate this reconciliation. We introduce the concept of temporal ambidexterity and define four intertemporal tensions involving an organization’s objectives, resources, markets, and uncertainty. We examine how firms can address these tensions successfully in the context of new ventures, and to do so we focus on three managerial capabilities of founder‐CEOs: expertise breadth, external connectivity, and empowering leadership. Results from 243 new ventures in China suggest that temporal ambidexterity improves with these managerial capabilities, and more so for younger ventures. Our findings shed light on solutions and mechanisms by which intertemporal balance is fulfilled, particularly for new ventures in a dynamic environment.

By proposing an integrated strategic choice framework, we theorize the distinctive dynamics of international expansion by emerging economy enterprises. Specifically, we explicate how these firms build international presence based on combined strategic entry (i.e., prompted by internal capabilities such as innovation and diversification) and strategic exit (i.e., pushed out by external handicaps at home such as institutional obstacles and market competition). Further, a firm’s cooperative ties with foreign multinationals in the former’s home country fortify the strategic entry intent, while ties with home government institutions weaken the strategic exit intent. We also demonstrate that building international presence helps bolster firm performance, highlighting the economic catch-up consequence of international expansion. Analyses of a two-year imbalanced panel data of 2136 firms statistically support our hypotheses.

We study private firm innovation at an advanced stage of institutional transition in Central and Eastern Europe and the Commonwealth of Independent States. We adopt an integrated view, where the institution-based view of strategy is complemented by institutional imprints and entrepreneurial agency to argue that innovation at that stage of transition depends on private firm founding conditions earlier during the transition and on recent strategic initiatives to exploit specific opportunities, improving the innovation capacity of firms. In a ten-country sample of 2322 private firms, we find that firms founded earlier and those of larger size at inception are better at innovation because of imprints favoring network-based approaches. Innovation is even greater when these firms’ top manager has less industry experience, suggesting complementarity between network- and resource-based approaches. Additionally, firms that upgrade their management knowledge and improve their operational efficiency achieve higher innovation, and the effect of the former is augmented with a greater foreign market focus. Our findings also suggest that the role of entrepreneurial agency is stronger than that of institutional imprinting. These results have important implications for the institution-based view of strategy and private firm innovation in transition economies of CEE and CIS.

Research Summary In underdeveloped countries like those in Sub-Saharan Africa, firms suffer from human capital voids (i.e., a prevalence of very low levels of skills among individuals). These human capital voids have a negative effect on performance improvement. However, managers can solve this negative effect by choosing organizational upgrading mechanisms that are contextually appropriate. In particular, operating joint ventures with foreign partners compensate for this negative effect, whereas internal research and development (R&D) amplifies this negative effect. Managers should also monitor and push for the reduction of country-level human capital voids because the influences of organizational upgrading mechanisms change. In countries with more developed human capital, joint ventures have a weaker compensating effect, and R&D investments cease to amplify the negative effect. Managerial summary We analyze how firms in underdeveloped countries overcome human capital voids—a prevalence of very low levels of skills among individuals—to improve performance. Building on the knowledge-based view, we argue that managers can strategically select organizational upgrading mechanisms to compensate for the negative effect of the human capital deficiencies of employees on firm performance improvement. We propose that external mechanisms (e.g., operating a joint venture with foreign partners) are better than internal mechanisms (e.g., internal research and development) because external mechanisms provide appropriate ready-made knowledge for learning of low-skilled labor, whereas internal mechanisms create additional learning inefficiencies. However, these influences change in countries with more developed human capital: external mechanisms have a lower compensating influence, whereas internal mechanisms become less inefficient. Copyright © 2016 John Wiley & Sons, Ltd.

Alleviating poverty in the least developed countries (LDCs) requires raising the income level of local workers. We look at the poor as producers and explore drivers of higher employee wages. We focus on small and medium enterprises (SMEs) because they are a major driver of employment growth and poverty alleviation in these countries. To pay higher wages, SMEs need to increase organizational efficiency. We argue that in LDCs, characterized by substantial formal institutional constraints, SMEs can improve efficiency either by internalizing inefficient formal institutions or by taking advantage of institutional enablers, established not only by local governments, but also by international, non-governmental, non-profit, or social enterprises set up around the world. In a sample of 1273 SMEs from seven LDCs across Africa, Asia, and the Middle East, we find support for a mediated model, where SMEs with government contracts, higher exports, or female ownership achieve higher organizational efficiency, and in turn pay higher employee wages. The strongest mediation occurs for female-owned firms and the weakest for exporting firms, while the direct relationships to wages are strongest for exporting SMEs. The data support the idea that SMEs with a government contract are more efficient in transacting with other constituents in the business environment, those with higher exports have a broad base of efficiency sources, and those with female ownership are particularly adept at exploiting local business and societal relationships.

Developing compositional capability is critical for small-and-medium enterprises to compete in emerging markets. We advance a strategy tripod model embedding compositional capability in three conditions that promote the compositional blend of imitation and innovation. In a sample of 163 SMEs from China, we find that industry-level competitive intensity and intermediate market openness, firm-level cooperation orientation and upgrading orientation, and institution-level government support and weak IPR protection positively influence the development of compositional capability which stimulates firm performance with respect to both objective and subjective performance indicators. These findings have strong implications for the composition-based view and the growth of SMEs.

Current theory on foreign subsidiary autonomy is insufficient to examine a situation where a multinational lacks experience to organize global operations, and yet intends to compete extensively with established multinational enterprises (MNEs) from advanced economies. By building on theoretical perspectives developed for emerging-market multinational enterprises (EMNEs), we advance the idea that foreign subsidiary autonomy is a strategic mechanism to overcome the EMNE’s weaknesses in managing globally dispersed businesses and their home-country disadvantages after foreign entry. Subsidiary autonomy delegation assists in performing the learning functions necessary for overcoming resource and capability voids, as well as for distancing the subsidiary administratively from the parent’s negative home-country institutional heritage. Analyses of survey data collected from headquarter senior executives of 240 Chinese MNEs suggest that subsidiary autonomy delegation is higher among firms relying on foreign markets as a springboard to acquire strategic assets, whose top managers at the headquarters perceive high domestic institutional constraints, and which do not count on government assistance to expand internationally. Further, we demonstrate that these relationships are strengthened with greater inward foreign direct investment cooperative experience, and with the use of merger and acquisition entry modes. These findings have important implications for theories on subsidiary autonomy.

Current theory on foreign subsidiary autonomy is insufficient to examine a situation where a multinational lacks experience to organize global operations, and yet intends to compete extensively with established multinational enterprises (MNEs) from advanced economies. By building on theoretical perspectives developed for emerging-market multinational enterprises (EMNEs), we advance the idea that foreign subsidiary autonomy is a strategic mechanism to overcome the EMNE’s weaknesses in managing globally dispersed businesses and their home-country disadvantages after foreign entry. Subsidiary autonomy delegation assists in performing the learning functions necessary for overcoming resource and capability voids, as well as for distancing the subsidiary administratively from the parent’s negative home-country institutional heritage. Analyses of survey data collected from headquarter senior executives of 240 Chinese MNEs suggest that subsidiary autonomy delegation is higher among firms relying on foreign markets as a springboard to acquire strategic assets, whose top managers at the headquarters perceive high domestic institutional constraints, and which do not count on government assistance to expand internationally. Further, we demonstrate that these relationships are strengthened with greater inward foreign direct investment cooperative experience, and with the use of merger and acquisition entry modes. These findings have important implications for theories on subsidiary autonomy.

This article examines an important yet understudied issue—the governance mode for business process offshoring (BPO). By applying transaction cost economics and organizational control perspective in the global BPO context, we suggest that BPO's governance mode (foreign captive, joint venture, and independent vendor) is determined by task features, such as knowledge specialization, information security, and process codifiability, and by needed process integration, horizontally between departments and units within the provider and vertically between the provider and its global client and its local subcontractor. Findings from our analysis of 308 global BPO units in India and China confirm our hypotheses.

This article theoretically proposes and empirically verifies an understudied issue in the business ethics (BE) and corporate social responsibility (CSR) literature—how moral degradation (MD) in a society influences the relationship between BE or CSR and firm performance (i.e., corporate legitimacy and competitive advantage). Building on strategic choice theory, we propose that both BE and CSR become more important in enhancing business success when the perceived MD is heightened. Our analysis of 300 firms operating in China statistically confirms our hypotheses: first, under high MD, firms’ engagement in CSR results in higher corporate legitimacy and competitive advantage, and second, their adherence to ethical business codes leads to higher corporate legitimacy. We conclude the article by outlining the implications for both theory and practice.

We explore how home country conditions affect outward foreign direct investment (OFDI) strategies (scale, timing, location) employed by developing country multinational corporations (DMNCs). Extending from the springboard and LLL (leverage, linkage, and learning) perspectives, we illustrate that DMNCs rely on their home base during their internalization process in a unique fashion compared with traditional multinationals due to their well-established strengths at home and competitive weaknesses overseas. Our survey of 153 DMNCs from China shows that, beyond the host country impacts that have been widely studied, DMNCs' overseas investment strategies are influenced by home country environment parameters, including economic growth, perceived institutional hardship, competitive pressure, and by their home country operational characteristics, including inward internationalization, innovation orientation, and business development stage.

This study addresses an important issue in designing and managing business process offshoring (BPO): process integration between an offshore service provider and its global BPO client. We applied the information-processing lens in global BPO and developed the logic that internationally disaggregated process integration requires a fit between process integration and BPO's task characteristics (i.e., task complexity and security) and task interdependence (task connectivity, stickiness, and dependency). This alignment is further moderated by the task context, such as the geographic dispersion of the global client's end-customers and the type of offshore provider (independent vendor vs captive and joint venture). Finally, we suggest that process integration has a positive but curvilinear relationship with the economic returns achieved by offshore providers. Our analysis of 308 BPO companies in India and China supports our propositions. We conclude that international managers monitoring and integrating globally disaggregated activities in BPO should establish a proper alignment with the BPO project's task traits and task interdependence, and look closely at the conditioning effect of external complexity. By redressing the paucity of research on governing global BPO, this study offers some insights into the integration–externalization dynamics for growing business/knowledge process offshoring.

Guanxi, a social network tie drawing on connections in business relations, has been identified as a powerful strategic tool helping organizations maintain competitive advantages and achieve superior performance. However, prior empirical studies on die gM/m-performance link provide indefinite conclusions. The purpose of this study is to systematically review and quandfy theguanxi-performance link in a meta-analytic framework by decomposingguanxiinto business ties (i.e.,guanxiwith business partners) and government ties (i.e.,guanxiwith government authorities) and organizational performance into economic performance and operational performance. Based on effect sizes from fifty-three studies encompassing 20,212 organizations, we estimate that the overall effect size of theguanxi-pertormance relationship is positive and significant, thus endorsing the argument thatguanxidoes enhance organizational performance. Specifically, our meta-analysis results demonstrate that both business and government ties lead to both economic and operational performance. However, business ties have a bigger impact on operational performance, whereas government ties exert larger effects on economic performance. Further meta-analytic regression results suggest that ownership (state-owned vs. non-state-owned) and location (Mainland vs. overseas China) explain some of the variations of theguanxi-performance link. Both business and government ties are more important to organizations in Mainland China than to those in overseas China. Government ties are more important to state-owned than to non-state-owned organizations. Lasdy, while business ties remain a valuable strategic tool in China, the importance of government ties is time-variant and has been declining with the development of the institutional environment in China.

In this article we present an important yet understudied field in international management—comparative strategic management across nations. Although the strategic management discipline traditionally uses the firm as a unit of analysis, and indeed firms within the same nation or industry are often heterogeneous, as argued by the resource-based view, we observe something more. We note a sustained and systematic pattern of strategic management issues at the national-level. We explicate that a unique bundle of national-level institutional, competitive and socio-cultural conditions function together with a repertoire of distinctive capabilities or weaknesses for most firms, incubating certain national-level patterns of corporate-, business-, and international-level strategies adopted by most firms within the nation. To further illustrate we use BRIC countries (Brazil, Russia, India and China) to showcase why and how we advance the study of comparative strategic management (CSM). In our quest to guide future research on CSM, we present a rudimentary yet overarching framework of comparative environments, comparative capabilities, and comparative strategies among firms operating in BRIC countries.

Executive Overview Emerging economy enterprises nowadays relentlessly scale the value chain in a quest to compete on the world stage in part by copying the products of others. They develop new products and services that are dramatically less expensive than their Western equivalents. In this article we discuss what these copycats are and how they have grown in their unique trajectory. We emphasize their unique capabilities and weaknesses, internal and external conditions that foster growth, and strategies and paths that transform them along a continuum from duplicative imitators to creative imitators and ultimately to novel innovators. To this end, we present the CHAIN Framework (combinative, hardship-surviving, absorptive, intelligence, and networking) capabilities to showcase the copycats' capabilities and discuss STORM conditions (social, technological, organizational, regulatory, and market) that spur their growth. Finally, we present four case studies of copycats and discuss future research on this issue.

We extend the internalization literature by theorizing how the public disclosure of corporate social irresponsibility (CSI) by multinational companies (MNCs) can damage their firm-specific advantag...

We analyze how multinational subsidiaries overcome deficiencies in infrastructure in developing economies. Drawing insights from the resource dependence theory, we explain how a subsidiary‟s dependence on host country‟s soft infrastructure or institutions and hard or physical infrastructure becomes a critical constraint under which it has to strategically respond. We propose three ideas. First, we propose that the degree of infrastructure deficiencies in a developing economy constrains the subsidiary‟s investment scale in the country. Second, the subsidiary can overcome these constraints using three strategies: adaptation, or gaining experience in operating with deficient infrastructure; influencing or lobbying the government to reduce uncertainty in investment; and escape, or reducing exposure to deficient infrastructure by seeking foreign markets. Third, the first two strategies are more effective in addressing hard infrastructure deficiencies and the last strategy is more effective in redressing soft i...

Building on signaling theory, we analyze how firms from emerging countries can address the negative impact of the liability of emergingness in exports. Because of information asymmetries, firms fro...

We study how home-country institutions influence multinationals’ foreign direct investment locational strategies. We argue that the influence of home institutions is stronger when home countries ha...

We analyze how capability upgrading impacts the performance of emerging market firms. Building on the organizational learning literature to theorize upgrading as a problem-solving process, we propo...

Institutional change in emerging economies provides both enabling and constraining forces for firm to upgrade capabilities rapidly to underpin organizational competitiveness. In this paper, I propo...

Prior research on organizational capability upgrading has limited its focus on the upgrading means and outcomes, leaving the upgrading process under studied. To fill the gap, in this paper, we theoretically explain and empirically test the process during which firms decide on two alternative capability upgrading directions: capability-deepening or capability-broadening upgrading. We propose that firms choose a certain capability upgrading direction as a deliberate problem-solving process, and that an effective learning mechanism is needed to facilitate the process. Specifically, a firm with high perceived proprietary resource constraints tends to have high engagement in capability-deepening upgrading, while a firm that possesses high ordinary resource slack will have high engagement in capability- broadening upgrading. Further, international benchmarking serves as an important mediating mechanism that guides the firm to a specific capability upgrading pattern to resolve the identified problem. The finding...

Seeking natural resource remains a critical motivation for multinationals’ foreign direct investment. Yet, few studies have investigated why firms differ in their location choices in seeking for na...

In this paper, we present a temporal ambidexterity view to theorize how firms operating in emerging markets improve their performance over time. Specifically, we conceptualize that temporal ambidex...

Despite common views that good performers must be innovators, recent developments suggest that imitators can also achieve good performance. To address this puzzle we examine a neglected spectrum of...