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For many years, and with great emphasis since 1995, China has followed a technology-and education-led development strategy. Foreign multinational corporations (MNCs) have played an important role in China’s growth, in developing innovations and contributing to the creation of intellectual capital in China. This chapter reviews the role of MNCs in the creation of foreign intellectual capital in China and its transfer to Chinese firms, including incentives and policy implications for indigenous innovation. It also discusses the evolution of MNCs’ research and development (R&D) strategies in China, China’s policies toward attracting foreign intellectual capital, and the changing policy environment.

Purpose The purpose of this paper is to focus on “how to create value from collaborative innovation,” which is a core question when companies plan open-innovation initiatives. China’s Huawei Technologies is taken as the main case study, with other companies’ practices as further examples to elaborate and validate a new yet practical model. Design/methodology/approach This paper is based on the direct experience over many years of two Huawei technology executives – the very recent head of the technology cooperation department and the current manager of the same unit. Findings This study provides a spiral four-stage model, named SWIM, with each stage being a decision guided by a 2 × 2 matrix. These stages, named scope, weave, identify and modularize, try to balance resource allocation toward a foreseeable value, though it might be long term. Research limitations/implications The research is primarily based on one company. The validity of its recommended model can be tested only after other companies have applied it. Practical implications The research offers a practical framework for how companies can improve their open innovation. Social implications Large companies are important players in innovation networks. Improving the ability of large companies to operate open innovation will help many other companies and the society as a whole. Originality/value The proposed model is original and provides insights from China and is not a traditional source of management innovation. The paper will also help Western readers get a better understanding of management in what will soon be the world’s largest economy.

Based on two multi-year research streams involving extensive interviews with both Chinese and Western companies in China, this paper provides a perspective on the emerging paths of Chinese company innovation. We report on what we found to be six major paths to innovation taken by Chinese companies. While all these paths have also been taken by many Western companies, we discuss here the unique Chinese adaptation or intensification of each approach. Our findings indicate that the innovation advantages of Chinese companies may well be in the creative combinations of available innovation practices. We conclude with views on the future of innovation in China and directions for future research.

Multinational companies (MNCs) have traditionally conducted R&D and other innovation activities in developed countries. At the same time, most local companies in emerging markets (EMs) have traditionally imitated and adapted rather than innovated. But recent years have seen a new phenomenon of MNCs conducting R&D activities in emerging markets, and EM companies becoming significant innovators. This chapter examines the reasons for this change, especially the increases in EMs of science and technology capability, per capita incomes, customer sophistication, unique local needs, and market size. The chapter examines the innovation activities of both local and foreign companies, focusing on the two most dynamic EMs, China and India, as well as briefly reviewing other major EMs such as Brazil, Russia, Turkey, and South Africa. It concludes that innovation in EMs for both home and foreign markets is now an established and growing factor in international business.

The focus of this chapter is on local firms in emerging markets as participants in global value chains (GVCs), and how some of them make the transition from local assembler to value chain. The purpose of this chapter is not to provide a comprehensive literature review; rather, the authors discuss key GVC concepts that are relevant to their focus. The chapter begins with an overview of the GVC notion highlighting the issues of governance and upgrading. Next, it briefly reviews the following key drivers of GVCs in emerging markets: level of economic development, maturity of institutions, science and technology level, and company management capabilities. The authors then highlight the rise of EM firms within GVCs in three phases: (1) local assemblers, (2) component manufacturers, and (3) value-adding innovators and partners. The chapter closes with a discussion on the implications for international theory and future research, noting the rise of anti-globalization sentiments and the imperative for innovation within GVCs.

Purpose – Multinational companies are increasingly locating R&D activities in emerging markets, particularly China. This paper aims to focus on why China is moving from imitation to innovation, how MNCs are evolving their R&D activities in China, the challenges they face, and how they deal with these challenges. Design/methodology/approach – As this is a viewpoint paper, the authors do not report any methodology other than the general research that the authors have been conducting for the last two years, primarily interviews with companies. Findings – The key finding is that China is moving from imitation to innovation and that multinational companies should develop strategies for conducting R&D there. Originality/value – This is a fairly original paper in that there has been only limited research on innovation in China.

In this age of tough, global competition, companies in business-to-business markets need to rethink the way they manage their customer portfolio and interact with their customers. Customer managers with mainly sales-or relationship-oriented roles cannot leverage their business relationships with customers who seek co-creation. For such co-creation relationships, companies need to install network-oriented managers who systematically create value and reduce risk together with the customer. This article distinguishes three customer asset management perspectives (i.e., sales, relationship, and network) that may be employed by customer managers at the supplier-customer interface. Following an explication of the evolving network perspective, it describes how firms can nurture the network perspective and the corresponding customer manager role in terms of mindset, context, and competence.

PurposeMany multi‐business companies apply one performance management approach to all their businesses despite differing needs. This study proposes a flexible approach to managing performance that allows for variation across businesses and over time.Design/methodology/approachBased on a study of over 100 consulting projects in performance management and interviews at 15 major organisations.FindingsThe best way to simplify performance management is to recognize that it has been approached from the dimensions of people and process for years. The people dimension considers how to get the best out of people and the way they interact with each other. The process dimension is about formal mechanisms for executing strategy and tracking the more quantifiable aspects of performance.Practical implicationsAn insightful framework to help companies develop the right kind of approach to managing performance.Originality/valueBased on unique and extensive consulting experience and research data. Distinguishes between performance per se and the process of managing performance. A new framework that combines people and process dimension for selecting the right approach to managing performance.

A large and robust empirical literature demonstrates that there is a strong relationship between the performance of a multinational enterprise (MNE) and its degree of multinationality We develop a new metric to capture the return on foreign assets (ROFA), which we use as an alternative metric to return on total assets (ROTA) as a dependent variable representing performance. We find a significant S-shaped relation between ROFA and the degree of multinationality across a large set of UK firms. [ABSTRACT FROM AUTHOR]

This article examines the issue of determining long-term sustained superior financial performance. We demonstrate that the technique of frontier analysis is a robust and theoretically consistent way to identify relative performance. We show how our approach, although dependent on the reliability of reported financial data (which recent events show needed to be treated with caution for some companies), addresses the three critical issues in the measurement of performance: balancing short-term and long-term performance, capturing the multidimensional nature of performance, and finding the right peer comparators. The approach is particularly important today, given the failure of past performance to signal in any way how firms would be able to weather a pervasive global crisis.

Organizational performance is one of the most important constructs in management research. Reviewing past studies reveals a multidimensional conceptualization of organizational performance related predominately to stakeholders, heterogeneous product market circumstances, and time. A review of the operationalization of performance highlights the limited effectiveness of commonly accepted measurement practices in tapping this multidimensionality. Addressing these findings requires researchers to (a) possess a strong theoretical rationale on the nature of performance (i.e., theory establishing which measures are appropriate to the research context) and (b) rely on strong theory as to the nature of measures (i.e., theory establishing which measures should be combined and the method for doing so). All management research on performance should explicitly address these two requirements. The authors conclude with a call for research that examines triangulation using multiple measures, longitudinal data and alternative methodological formulations as methods of appropriately aligning research contexts with the measurement of organizational performance. © 2009 Southern Management Association. All rights reserved.

Within the context of the international business literature on multinationality and performance we develop new data on the foreign presence and performance of large UK multinational enterprises (MNEs). There are 32 UK MNEs for which we can obtain data on both their degree of multinationality (measured by the ratio of foreign-to-total sales, F/T) and on their performance. Here, in addition to the traditional overall performance of the firm, shown as return on total assets (ROTA), we use new data on the return on foreign assets (ROFA). We conduct analytical work to show the positioning of the UK MNEs in the ROFA and F/T space and provide regression results showing a linear relationship between multinationality and performance, using the new ROFA metric.

This article presents a strategic intent perspective (SIP) to analyze the foreign acquisitions made by Chinese firms. It suggests that Chinese firms strategically use cross-border acquisitions to achieve goals, such as acquiring strategic capabilities to offset their competitive disadvantages and leveraging their unique ownership advantages, while making use of institutional incentives and minimizing institutional constraints. The SIP is supported by the evidence from three firms that we studied, where dozens of interviews were conducted, including the one with the founder of Lenovo. This study contributes to extant international business theories by incorporating the SIP to examine internationalization strategies of firms from developing countries.

This paper examines the international success of British companies in a matrix combining global market share and international revenues. We identify those industry segments in which British companies are most successful internationally, and also investigate whether these are attractive industries in terms of profitability and growth. We find that the industries with the largest global market shares for British companies are Mining, Casinos (and Gaming), Oil Companies (Major), Distillers & Brewers, and Water Utilities. Four of the top ten might be considered to be “sin” industries. The industries with the highest international revenues are Precious Metals, Pharmaceuticals, Industrial (Diversified), Oil Companies (Secondary), and Mining. We also find that virtually all of the largest British firms average over a 10% global market share, in the “British Winners” segment of our matrix. However, we find the second measure, the extent of internationalization, to be ambiguous. The manufacturing (product-based) firms tried to be highly internationalized, as they compete globally, but the largest British services firms (financials, retailers) tend to have low internationalization, and therefore appear to benefit from a still somewhat regulated home market. In addition, British companies have done a good job of building up global market shares in higher growth industries. We provide recommendations for managers as to how British companies with different combinations of global market share and extent of internationalisation can improve their positions. Our methodology can also be applied to analyzing companies from other nations.

How does the Internet affect globalization and global strategy within firms? How should multinational companies re-evaluate their global strategies to best take advantage of the Internet? Both managers and researchers have assumed that a correct and appropriate use of Internet technologies by companies speeds up globalization of industries and enables firm use of global strategies. This paper provides empirical evidence on the exact uses of the Internet by global companies, how their use affects key globalization drivers and how they believe this, in turn, affects performance. We derive ten lessons on how companies can use the Internet to enhance their global strategies.

Business models rose to prominence in the dot-com boom. Their usefulness may not have ended with the dot-com bust. George S. Yip believes that business models may shed important light on how we understand and practise strategy. Business academics and consultants have been writing about strategy for over 40 years. Yet there is still great confusion as to what strategy is. The Internet boom and bust introduced a new term, "business model", that may go a long way to clearing up the confusion.

This article examines the joint effects on business strategy of the Internet and globalization. It develops a framework for evaluating how the Internet affects the globalization potential of individual industries and the global strategies that companies should adopt. The impact of the Internet will not be uniform. Not only do its direct effects vary from one industry to another, but also it speeds up globalization at different rates in different industries. The article shows how to use the Internet to support five types of global strategy: market participation, products and services, activity location, marketing, and competitive moves.

This article looks to the strategic opportunities provided by the recent Asian economic crisis. It suggests that whilst the crisis did require immediate responses, the longer-term issues were equally important. The authors look at different reactions to the crisis. They discuss a variety of strategies, including bargain hunting for assets and making strategic purchases whilst prices are low, forming new alliances to augment or supplant those that already exist, and expanding whilst competitors are weak. They embed their ideas into traditional strategic thinking, touching on issues of competence enhancement, competitor awareness and customer focus. They use topical examples to illustrate their points. Crises will reappear unexpectedly in countries and markets, demanding that firms revisit their strategies. This article provides a framework for thinking about these issues.

A study of 68 recently internationalized U.S. firms, using structural equations, shows that newly internationalizing firms do not on average follow a highly systematic approach. Some firms make use of a systematic sequence of steps, and the more systematic the approach, the better is the performance.

The authors posit the question of whether companies should formulate their strategies according to a global or regional corporate mindset. In this study, they explore the strategic responses of multinational automotive companies embedded in a simple framework of interdependent industry forces, total globalisation barriers, and competitive regionalisation advantages. Regional strategies could be viewed as alternative, potentially superior solutions vis-a-vis fully globally integrated or locally responsive approaches. The presented evidence suggests that there are some valid reasons for companies to follow an eclectic course of regionalisation as well as globalisation. Such an approach involves clustering countries that exhibit similar market conditions and addressing homogenised regional consumer tastes, while minimising adaptation costs. In the context of the automotive industry, however, the preliminary findings suggest that a car producer should first become a global company, in order to efficiently and selectively regionalise in a second step. Overall, regional strategies could be associated with later, rather than earlier, stages in the evolution of a company's global strategy.

Two competing theories of firm performance have been proposed in the business strategy literature, the industry structure view and the resource-based view of the firm. Empirical studies have estimated the relative contribution of industry structure, corporate, and business unit effects to business unit performance. These studies, however, have been restricted to using only single-country data. Missing from this debate is an international dimension that includes the relative importance of country conditions as a determinant of firm performance. The objective of this article is to fill this void by adding country characteristics to the analysis. Using cross-country data of four large multinationals in a single industry, we estimate the relative importance of country characteristics in addition to industry structure, corporate characteristics, and subsidiary strategy as determinants of subsidiary performance by using multiple regression analysis. This analysis also will contribute to the discussion on environmental determinism versus strategic choice. Country and industry characteristics are mainly outside the control of management, whereas corporate characteristics and subsidiary strategy are under management's control. Results show that country characteristics are by far the most important determinant of subsidiary performance, followed by industry structure, subsidiary strategy, and corporate characteristics. Thus, country conditions are a very important determinant of firm performance that so far has been overlooked in previous studies. These results indicate that subsidiary performance is determined mainly by conditions outside the control of subsidiary management. In terms of competing theories, these results support the environmental determinism view more than the strategic choice view and the resource-based view of the firm more than the industry structure view. These results also have important implications for multinational corporations' selection of countries for entry and investment and for performance evaluation of subsidiary management.

This paper discusses the patterns and determinants of global marketing, based on a contingency framework of industry globalization drivers, company position and strategy, organizational factors, and parent company characteristics. These patterns and determinants are examined in a sample of 64 businesses belonging to very large American, European and Japanese multinational companies. The study finds that these businesses mostly use global branding and global packaging but make much less use of global uniformity in other elements of the marketing mix. Several factors, including nationality, explain the use of global marketing.

Explains the concept of global account management and the forces driving it. Provides a framework to help managers to recognize why and when to use it and how to implement it successfully. Discusses examples from the advertising, computer, telecommunications, electrical component and banking industries and provides an in‐depth case study from one of the leading practitioners of global account management, the Hewlett‐Packard Company. Concludes with a guide to successful implementation.

This article argues that the use of globally integrated strategy provides an additional explanation for Japanese success. Furthermore, this explanation links directly to many of the accepted factors that result in competitive superiority for Japanese companies. The article elaborates on different aspects of global strategy and contrasts typical Japanese and American approaches, and provides some empirical evidence on these differences. Japanese companies' success in post-bubble reconstruction will require a reemphasis on such strategies.

This article provides a framework for developing global strategies for service businesses. It integrates existing, separate frameworks on globalization and on service businesses, analyzes how the distinctive characteristics of service businesses affect globalization and the use of global strategy, and diagnoses which aspects favor globalization and which do not. It then applies the new framework to numerous industry and company examples, with particular emphasis on the role of information technology.

In the early 1990s business commentators were still casting doubts on the prospects of our three transformers. Thus, in the same period from 1992 to 1994, the Financial Times could describe all three as “stuck in the middle” strategically. Cadbury Schweppes was neither a national nor a convincingly international player. Tesco was not a leading discounter, but nor could it be called a high-profile quality provider. And Smith & Nephew’s pretensions as a supplier of global, high-margin medical devices was undercut by a hard-to-shift image of a slow-moving peddler of bandages and creams.

We began this book by arguing that a major challenge facing executives is the avoidance of strategic drift. Businesses become so wedded to the distinctive capabilities that brought them success that they are either blinded to changes in their environment, with the result that their capabilities become outmoded and their strategy redundant; or, if they recognize the changes taking place, they dismiss them because they are so wedded to the strategy they are following. The ability of firms both to exploit the capabilities on which they have built success and to explore new bases of success seems rare. Our interest has been in such exceptional firms (our successful strategic transformers [SSTs]) that developed capabilities upon which they could make transformational changes while retaining high levels of performance. In this chapter, we turn our attention to the implications of our findings for managers and for management practice.

Every decade has at least one: IBM in the 1980s, General Motors and Marks & Spencer in the 1990s, Dell, Nissan, Sony, BP, Toyota, and Nokia in the new millennium. The pattern is so familiar that it has come to seem inevitable. A company that is admired and respected as a paragon of its industry falters and runs into financial crisis. Hero becomes zero. Shareholders rebel, managers are sacked, and ultimately major change ensues. What is going on here? Why don’t organizations see what’s coming, or if they do, why don’t they react until the 11th hour? Why does it take a crisis to induce change?

As early as the 1950s Tesco, Smith & Nephew, and Cadbury Schweppes started developing traditions of transformation: traditions of continuity, anticipation, contestation, and mobility. By the late 1970s only a few remaining sources of inertia stood in the way of these traditions becoming an integral part of the strategic transformation process. A few catalyst events would provide the tipping point: Tesco’s 1977 Operation Checkout, Cadbury Schweppes’ 1978 Long-Range Plan, and Smith & Nephew’s 1978 launch of OpSite. These events precipitated a significant generational and cultural shift.

The previous three chapters described the histories of the three pairs of companies. We laid out the stories with a minimum of interpretation; that is the role of this chapter. Here, we use the evidence from the histories of the six companies to explain four “traditions” that we argue provided the context within which our exceptional firms transformed themselves while still successful: traditions of (1) continuity, (2) anticipation, (3) contestation, and (4) mobility. We then explain how these manifested themselves in the period of exceptional performance (1983–2003) we identified in stage 1 of our study.

In this chapter, we describe the history and strategies of the three comparator companies: J Sainsbury as the comparator for Tesco, Unilever as the comparator for Cadbury Schweppes, and SSL International as the comparator for Smith & Nephew.

This article discusses two concepts in an emerging theory of knowledge development in globalizing firms. The concept of "language games" is developed to shed light on the role of language in global ...

This paper develops a model of global strategy that includes the constructs of industry globalization potential, the use of global strategy, the role of organization and management and the performance consequences of using global strategy. Propositions are developed as to why American and Japanese MNCs might differ in their perceptions of industry globalization potential, in their desired global strategy response, in their organizationally-derived ability to implement global strategy and in their resulting performance. The model and arguments are examined in extensive interviews with senior executives at 36 worldwide businesses belonging to some of the largest American and Japanese MNCs. Data are analyzed using a partial least squares causal model. The results show that the Japanese firms have more globalized stategies than do the Americans, and that this factor affects their performance favorably.

This article reports on a research study of how 18 worldwide businesses belonging to some of the largest American multinational companies responded in their strategies to industry globalization forces. The findings reveal some effective approaches, but at the same time show that most of these businesses lagged in their response. In particular, organizational, managerial and cultural barriers to implementation hampered efforts to change. This article develops a series of lessons on how multinational companies can improve their formulation and implementation of global strategy. © 1995 John Wiley & Sons, Inc.

China’s outward foreign direct investment (OFDI) has developed extremely rapidly over the past few years, rising from US$2.5 billion1 in 2002 to US$26.5 billion in 2007. Between 1978 and 2002, the accumulated value was US$30 billion, rising to US$57.2 billion by 2005, US$73.3 billion by 2006, and US$117.9 billion by 2007. By the end of 2007, a total of 7,000 Chinese firms had invested in 173 countries (MOC 2008). By 2008, China (including Hong Kong) had become the seventh largest source of OFDI worldwide, Chinese OFDI flows overtaking those of Japan (UNCTAD 2008). In addition to establishing new plants and subsidiaries overseas, Chinese firms have been rapidly acquiring well-known firms worldwide as a new form of transnational investment. Outward foreign acquisitions began in the late 1990s, logging US$344 million (nonfinance FDI) in 2000 and US$507 million in 2001. It jumped to US$2.8 billion in 2002, but subsequently fell to US$1.6 billion. However, since 2004 there has been an unprecedented rise, to US$3.9 billion in 2004 and US$6.5 billion in 2005, 53% of the total OFDI of the year (MOC and State Statistics Bureau 2006, 11). Outward acquisitions by Chinese nonfinance firms rose to US$15.8 billion during the first half year of 2008—61.6% of the total (MOC 2008). Table 10.1 lists the details of these acquisitions between 2004 and 2008.

This article uses a strategic analysis framework to examine the key strategic issues facing multinational enterprises (MNEs). While much of the discussion of international business has to do with the external conditions of international markets and industries, and much of the discussion of MNEs addresses their organizational structures and systems, it is believed that a distinct role exists for multinational strategy. Using an explicitly strategic perspective is meant to emphasize this position. Within this overall framework, the article discusses strategic considerations of the multinational enterprise specifically and ties different approaches to international strategic analysis back to standard strategy tools.

Using the chocolate industry as a case in point, the authors show how to analyze and take advantage of industry factors that either propel or weaken the trend toward globalization.

Organizational performance is one of the most important constructs in management research. We review the contexts that frame organizational performance as a dependent variable with specific emphasis on how it is operationalized and measured. The research contexts of past studies are firmly anchored around a multidimensional conceptualization of organizational performance related predominately to stakeholders, heterogeneous market circumstances, and time. The review of the operationalization and measurement of performance highlights the limited effectiveness of commonly accepted measurement practices in tapping this multidimensionality. By synthesizing the literature, the foundations are laid for the improved measurement of performance in management research. We conclude with a call for research that examines the effectiveness of triangulation utilizing multiple measures, applies longitudinal data and brings to bear alternative methodological formulations as means of appropriately aligning research contexts with the measurement of organizational performance. Validating these measurement approaches is an important agenda for further research. Previous Title: Measuring Organizational Performance in Management Research: A Synthesis of Measurement Challenges and Approaches

The measurement of company performance poses several challenges. Three critical ones are: balancing short-term and long-term performance, the need to use multiple measures to capture the broad meaning of performance, and finding the right peer comparators. We argue that truly sustainable long term superior performance should be observed over an extended period, and in comparison with industry peers from around the world. We describe how a technique, frontier analysis, can be applied to the issue of measuring performance. We apply frontier analysis to several companies in the oil industry to demonstrate how their performance can be ranked even when using eight divergent measures. We also apply the technique to identify which of 215 of the largest UK publicly-listed companies in 38 industries can qualify as long term superior performers. We find and name 28 qualifying companies in 19 industries.