Topic 10 - Revision

Lecture - Topic 10
Managing the Multinational Enterprise – MN20604
Course revision
Mariachiara Barzotto
mb2602@bath.ac.uk
ASSESSMENT FORMAT AND
REQUIREMENTS
Assessment
§ Group course work: 25%
§ Individual examination: 75%

COURSE WORK
Coursework details
§ Coursework Assignment (25%)
§ The group coursework will consist of an analysis of an international

firm on set questions.
§ Guidelines in Moodle under Group Coursework Information

Coursework details
Coursework details
Instructions
From the list below, select one multinational company (MNC).
Case company:
Ford, Kraft Foods, LIDL, Pfizer, PricewaterhouseCoopers (PwC),
Spotify, and Uniqlo Co.
This MNC will be the object of your assignment.

Coursework details
Question 1: From the list below, answer TWO out of the following list of issues:
§ How does the company compete internationally?Topics 2-3
§ How does the company manage knowledge internationally? For this question,
knowledge can refer to the management of innovation, which, in many firms, would be under the
responsibility of their R&D function. For PricewaterhouseCoopers, which is a professional service
firm, the question relates to how the firm manages knowledge more broadly.
Topic 7
§ How does the company manage corporate social responsibility (CSR)

internationally? To address this question, you may address the company’s CSR approach overall
or you may focus on specific CSR themes such as the environment or social issues.
Topic 6
§ How has the company been able to adopt a ‘born-global’ internationalisation
approach? This question can only be answered if you choose the company Spotify as your case
study for the assignment, as it can be characterised as a born-global firm due to its rapid pace of
internationalisation. Topic 8
Coursework details
Question 2:
Discuss key strengths and weaknesses of your company’s approaches
to the two issues that you have addressed in question 1.
Question 3:
Offer your recommendations to the MNC on how it can address the
weaknesses that you have identified in question 2.
Deadlines and word count
Submission date:
Thursday, the 14th of December by 1pm (UK time).
The word count is 2,000 (with an allowance of minus or plus 10%)
SUBMISSION INTO MOODLE, under “Coursework assignment”

in the Group Coursework Information
Evaluation criteria
Your assignment will be graded according to the following criteria:
§ Quality and depth of analysis (30%)

conduct a precisely argued and thorough analysis.
§ Establish soundly argued solutions and recommendations to the issues raised (30%)
your recommendations should be well justified, substantiated by theory and/or evidence.
§ Reference to the module topics and evidence of wider reading of academic literature (20%)
relate to the module topics that are relevant to the issues you are addressing and draw on
wider academic research on these two issues in order to inform your analysis. Your
analysis of the issues should be informed by relevant concepts, frameworks and
arguments.
§ Logical structure and quality of writing (20%)

make your assignment appropriately written, structured and presented.
Submission guidelines
• Your assignment should be uploaded through Moodle.
• You must attach a UG coursework cover sheet. Indicate the word count on the front cover sheet.
• Use Arial or Times New Roman font in 12 point and 1.5 spacing of lines.
• Your assignment is to be fully and consistently referenced.

• Note that your essay will be submitted to anti-plagiarism software.
• Please follow the Harvard or APA referencing style
• The word limit:

• includes all body text: footnotes or endnotes, citations, subtitles.
• excludes: tables, figures, appendices, bibliography, and executive summary.
EXAM
Exam format (1)
§ Essay-type questions, submitted via Inspera, on campus
§ Answer TWO questions out of four questions
§ Each question is weighted equally (50% of the overall exam mark for each
question)
Exam format (2)
§ Questions are essay-type

§ E.g. What are the key motivations driving the formation of strategic alliances
(Bartlett and Beamish, 2011)? Your answer should be illustrated with examples.
1. Technology exchange
2. Global competition
3. Industry convergence
4. Economies of scale and reduction of risk
5. Alternative to merger
§ Past exam papers are available from the library website

§ Some topics naturally vary from year to year as unit curriculums are regularly
updated
Exam format (3)
§ This is a closed-book exam.
§ Exam date: This exam starts at 09:30 on 16th January 2024 on campus.
§ During this exam, you are not permitted to communicate with any person(s) except an invigilator or
an assigned support worker.
§ You must not have any unauthorised devices or materials with you.
§ You must keep your Library card on your desk at all times.
§ The exam is designed to take approximately 2 hours to complete.
§ To submit your exam, you must press ‘Submit now’ in Inspera. You will not be able to amend your
attempt once you have submitted your exam, even if the exam has not ended.
§ If you have any difficulties submitting your attempt, an Invigilator will help you after the end of the
exam.
§ Do not open any additional browsers or apps. Invigilators will be at the back of the room and if
anyone is seen using any page other than Inspera it will be considered to be unfair practice and you
will receive a zero.
Exam format (4)
§ Readings marked as ‘essential’ constitute the core knowledge being

assessed; ‘background’ readings are optional and are not required for the
exam.
§ A laptop is the only equipment needed to complete your exam.

Marking criteria
1. Demonstrate your grasp of issues covered in the course
§ Ensure precision and rigour of your answer
2. Breadth and depth of coverage of answer to exam question, whilst retaining focus:
§ Demonstrate your knowledge on the question whilst clearly answering the question.
3. Linking of concepts, arguments etc. to ORGINAL examples but not in a descriptive way:
§ Examples should be used in a succinct way to convincingly support your arguments
§ Original means examples gathered from your independent research
4. Logic, structure, clarity of answers
§ Clear, well-structured arguments

§ Your answer should have an introduction and conclusion
Examinable topics
Examinable topics:
§ Understanding global and local pressures (Topic 2)
§ International firms’ competitive strategies (Topic 3)
§ Global mindset (Topic 4)
§ Corporate social responsibility in international firms (Topic 6)
§ Global knowledge management (Topic 7)
§ International entrepreneurship (Topic 8)
Not examined - not for revision:

§ Managing culture in international firms (Topic 5)
§ Engaging in cross-border collaboration (Topic 9)
TOPICS OVERVIEW
Understanding Global and Local
Pressures
Topic 2
Key objectives
§ Understanding conflicting environmental pressures for global integration

and local responsiveness.
§ Nature of industries
Two sets of conflicting external pressures
§ Forces for global integration
§ Forces for national responsiveness
Source: Bartlett et al. (2008) Chapter 2

Two sets of conflicting external pressures
Forces for global Forces for national

integration responsiveness
• Exploitation of economies of scale • National cultural differences
and scope - In ways of doing business
• Exploiting differentials in costs of - In consumer behaviour
factors of production across nations • Host governments’ demands
• Liberalised trade environment (policy)
• Technological advances • Growing pressures for localisation
- Communications
- Transport costs
• Competitive positioning
(‘global chess’)
• Forces of global learning and
innovation
Bartlett et al. (2008) Chapter 2

Industry effect
Relative strength of forces for globalisation vs. forces for local responsiveness
vary by industry
§ Global industries
§ Forces for global integration dominate
§ Multinational/multidomestic industries
§ Forces for national responsiveness dominate
§ Transnational industries
§ Forces for global integration and forces for national responsiveness are
both strong
Bartlett et al. (2008) Chapter 2

Industry effect
Mapping industries according to their degree of globalisation
Global industry Transnational industry
Consumer Electronics Pharmaceuticals
Global
integration
Forces
Multinational industry
Packaged foods
National Responsiveness Forces

Essential reading
Bartlett, Ghoshal & Beamish (2011) 'Understanding the international context:

responding to conflicting environmental forces'. In Transnational management:
text, cases and readings in cross-border management, 6th ed, by the same
authors. (available from Moodle)
International firms’ competitive
strategies
Topic 3
Key objectives
§ Types of MNEs’ competitive strategies

§ The Integration-Responsiveness framework
§ Strengths and weaknesses of competitive strategies
§ 3 ‘A’ strategies
Strategic Choice
Integration/
High
Responsiveness Matrix
Global Transnational
Need for global coordination

Strategy is making choices – of
what to do and what not to do.
Then aligning choices of how you
operate and behave with those
strategic choices.
Ref. Michael Porter
International Multi-National
Low Low High

Need for local adaptation
Bartlett et al 2008
High
Their internationalisation process relies on transferring new

Low
Low High
products, processes, or strategies developed in the home country

International Strategy to less advanced overseas markets: exploiting home-country
innovations abroad.
• Strategic orientation
- Exploiting knowledge from
the parent company by Pros: ability to create and leverage innovations
transferring it to foreign
Cons: deficiencies of both efficiency and flexibility because they
markets; expects to use do not develop:
innovations to reduce costs, • centralised and high-scale operations of companies
enhance revenues, or both adopting global strategies (obtained via global strategy)
• high degree of local responsiveness (that multinational
companies could master through their autonomous, self-sufficient, and
entrepreneurial local operations).
• Configuration of assets and
capabilities
- Core competencies
centralised, others E.g. U.S.-based MNEs such as Procter & Gamble, and General Electric.
decentralised.
Bartlett et al., 2008
High
International Multi-National Companies develop global efficiency, via different means to achieve
the best cost and quality positions for their products.
Low
Low High
Global Strategy Pros: efficiency

• standardisation leads to higher economies of scale which
lowers costs.
• Strategic orientation • helps to create uniform standards of quality throughout the
world.
- Global efficiency,
assumes that the best- Cons: less flexibility and learning
• high level of inter-country product shipments can raise risks
cost position is the key of policy intervention.
source of • centralises R&D might constrain:
• the ability to capture new developments abroad
competitiveness • the leveraging of innovations created by foreign
subsidiaries in the rest of their worldwide operations.
• high sourcing risks (e.g. exchange rate exposure),
• Configuration of assets concentration of activities may increase dependence on a
single facility.
and capabilities • limited ability to adapt to local markets
- Centralised and globally-
scaled E.g. Japan-based MNEs such as: Toyota, Canon, Komatsu, and Matsushita

High
Companies differentiate their products and services in response to
national differences in customer preferences, industry
Low
Low High
characteristics and government regulations (local-for-local

Multi-national Strategy innovations).
• Strategic orientation Pros:

• ability to adapt products and services to local market conditions.
- Flexibility to respond to • match costs and revenues on a currency-by-currency basis,
ability to detect potential opportunities for attractive niches in a
differences in national given market, enhancing revenue.
markets; sees differentiation • local self-sufficiency and local-autonomy to high flexibility and
responsiveness to local environments
as the primary way to
enhance performance
Cons:
• Inefficiencies, less ability to realize cost savings through scale
economies.
• Configuration of assets • inability to exploit the knowledge and competencies of other
and capabilities national units.
- Decentralised and self-

sufficient E.g. Europe-based MNEs such as: Unilever, ICI, Philips, and Nestlè.

High
International Multi-National Companies manage costs and revenues simultaneously, both

efficiency and innovation are important, and innovations can
Low
Low High
arise in many different parts of the world.

Transnational Strategy The transnational:

• first decides which key resources and capabilities are best
centralised
• realises scale economies
• Strategic orientation • protects certain core competencies
- Global efficiency, • provides the necessary supervision of corporate management.
flexibility, worldwide Resources concentrated at home:
learning simultaneously • basic research with core technologies (for strategic security and
competence concentration)
• global account team (to facilitate top-management control)
Resources concentrated but not necessarily at home
capabilities • WorId-scale production plants for labour-intensive products in
- Dispersed, lower-wage countries.
• R&D resources and activities in technologically-advanced
interdependent, countries.
specialised

High
Low
Low High
Transnational Strategy Pros:

• Ability to attain economies of scale
• Ability to adapt to local markets
• Ability to locate activities in optimal locations
• Strategic orientation • Ability to increase knowledge flows and learning
- Global efficiency,
flexibility, worldwide Cons:
learning simultaneously • Unique challenges in determining optimal locations of
activities to ensure cost and quality.
• Unique managerial challenges in fostering knowledge transfer
capabilities
- Dispersed, E.g. Sony
interdependent,
specialised
Source: Dess, G. D. et al., 2014 Strategic Management. McGraw-Hill Education

An alternative view: 3 ‘A’ Strategies
Aggregation: The pursuit of increased scale in order to achieve greater

efficiencies (e.g. sourcing) or effectiveness (brand recognition,
‘share-of-voice’).
Arbitrage: The pursuit of flexibility in sourcing and market access in order

to increase competitive advantage (e.g. adjusting the balance
of supplies from different countries depending on the relative
exchange & logistics rates)
Adaptation: The pursuit of insight and innovation from markets, moving

knowledge between markets to apply elsewhere for competitive
advantage.
Ghemawat, P. (2007), ‘Managing differences: The central challenge of global strategy’. Harvard Business Review, 85/3 (March). P. 59-68.
The three AAAs
§ Many companies will emphasise different As at different times of their evolution
§ Even within the same industry, firms can differ in their strategies
§ Companies should usually pursue one or two As

§ Ghemawat’s argument differs in this respect from Bartlett et al’s view on the transnational
strategy
§ It is possible for firms to progress on all three As but is challenging due to the tensions between
each strategy
§ Organisation & Strategy trade-offs make it very hard to pursue well, multiple ‘A’:
§ Choices and management of Staffing, Operations, Marketing, Leadership, Metrics, etc.
Ghemawat, P. (2007), ‘Managing differences: The central challenge of global strategy’. Harvard Business Review, 85/3 (March). P. 59-68.
Essential reading
Bartlett, Ghoshal & Beamish (2011) 'Developing transnational strategies: building

layers of competitive advantage'. In Transnational management: text, cases and
readings in cross-border management, 6th ed, by the same authors
Ghemawat, P. (2007), 'Managing differences: The central challenge of global

strategy'. Harvard Business Review, 85/3 (March), p. 59-68.
Global mindset
Topic 4
Key objectives
§ Understanding ‘global mindset’
§ The importance and development of global mindset

Global Mindset
§ Individual attributes that help influence individuals, groups, and

organisations that are unlike the leader’s.
§ Global mindset is a set of attributes and characteristics that help global

leaders better influence individuals, groups, and organisations unlike
themselves.
§ Influence individuals, groups, and organisations inside and outside their

firm, representing diverse cultural/political/institutional systems under
conditions of rapid change and high uncertainty.
Global mindset model
Source: Global Mindset Inventory,

Thunderbird School of Management
Global Intellectual Capital (GIC)
Source: Global Mindset Inventory, Thunderbird School of Management

Global Psychological Capital (GPC)

Global Social Capital (GSC)

What do we know about global mindset?
Link between Global “Managers who have a higher profile of Global Mindset are regarded by their
firms as more effective managers in general. They are also viewed as more
Mindset and Individual effective in influencing and motivating others, and building relationships.
Furthermore, they are believed to be better able to build trust and show a
performance more open and adaptive approach.”
“For virtually every medium- to large-size company in developed as well as developing

Link between Global economies, market opportunities, critical resources, cutting-edge ideas, and competitors
lurk not just around the corner in the home market but increasingly in distant and often
Mindset and little-understood regions of the world as well. How successful a company is at exploiting
emerging opportunities and tackling their accompanying challenges depends crucially on
Corporate performance how intelligently it observes and interprets the dynamic world in which it operates.
Creating a global mindset is a central requirement for building such intelligence.
Tighter focus on 2-3 key “Although it may be an appealing idea to set out to enhance all
elements of a global mindset throughout your organization, our
behaviours has greater findings indicate that the most effective way to develop its three
impact on performance components is by focusing on fewer capabilities in greater depth.”
Essential reading
Javidan, M. and Bowen, D. (2013), ‘The ‘Global Mindset’: What it is, why it matters,
and how to develop it’. Organizational Dynamics, 42, 145-155.
Corporate social responsibility
(CSR) in international firms
Topic 6
Key objectives
§ Challenges in implementing CSR in MNCs
§ Organisational learning and societal learning: the Civil Learning Tool
§ Types of MNCs’ approaches to CSR and respective advantages and

disadvantages of each CSR approach
§ Influence of corporate governance characteristics on MNCs’ approaches to CSR
§ Contingency factors affecting the successful implementation of CSR policies in

MNCs and their supply chains
Challenges in implementing CSR policies in MNCs
§ Differing ethical standards across countries

§ Complex local situations
§ Lack of international laws in many areas of CSR or difficulties in enforcing
laws at country level
§ Meeting increased costs of a socially responsible approach
§ Boundaries of MNCs’ responsibilities vis-à-vis suppliers and complexity of
implementing CSR practices in a globalised supply chain
Civil learning tool: CSR organisational learning
§ Organisations typically pass through five stages to becoming

more socially responsible ó organisational learning process
§ Defensive
§ Compliance
§ Managerial
§ Strategic
§ Civil
Source: Zadek, S. (2004) ‘The path to corporate responsibility.’ Harvard Business Review 82/12 (December): 125-132.
Civil learning tool: societal issue maturity
§ Societal maturity of issues (Zadek, 2004): defined as societal awareness of

issues
§ Four stages of issue maturity

§ Latent
§ Emerging
§ Consolidating
§ Institutionalised
Civil learning tool
CSR approaches in MNCs
Global CSR approach Local CSR approach Transnational CSR

approach
Emphasis Global integration/ Local responsiveness/ Global integration and
standardisation flexibility local responsiveness
Description Headquarters’ Local concerns take Attempts to reconcile

perspective and precedence over the tensions between
demands for consistency demands for global global and local
prevail over local consistency concerns
concerns
Source: Filatotchev, I. and G. K. Stahl (2015) ‘Towards transnational CSR: Corporate social responsibility approaches and governance
solutions for multinational corporations.’ Organizational Dynamics 44: 121-129.
Advantages and disadvantages of CSR approaches
Global CSR approach Local CSR approach Transnational CSR approach
Advantages Consistency in CSR activities. Responsiveness to local Global template for firm’s CSR
Clear rules of conduct. conditions. activities whilst allowing
Facilitates transfer of CSR Flexibility in terms of CSR adaptation of that template to
practices. strategies. local needs.
Helps manage reputational risks. Helps build trust among local High CSR performance at global
Helps build trust among global stakeholders. and local levels.
stakeholders.
Disadvantages ‘Ethical imperialism’. Ethical relativism. Difficult to strike appropriate
Neglect of local stakeholders. Difficult to determine what is balance between global
Blind application of global CSR morally right. consistency and local adaptation.
policies without considering local Neglect of global stakeholder High coordination costs and
circumstances. interests. difficult to implement.
Difficult to apply universal
standards.
May promote tolerance for
corrupt regimes.
Corporate governance types and MNCs’ CSR approaches
Global CSR approach Local CSR approach Transnational CSR approach
Corporate Shareholder supremacy Shareholder value at headquarter Stakeholders’ interests within the
governance emphasis level; context of long-term sustainability
Local stakeholder focus in
subsidiaries
Board monitoring Financial performance of Limited support for CSR at the Strategic objectives, including
focus the firm headquarter level; meeting local long-term sustainability of the firm
stakeholder demand at subsidiary
level.
Managerial incentives Linked to financial Linked to local performance Include a focus on ‘the triple
performance benchmarks bottom line’ alongside financial
considerations
Adapted from Filatotchev, I. and G. K. Stahl (2015) ‘Towards transnational CSR: Corporate social responsibility approaches and governance
CSR approaches in MNCs
§ A ‘transnational CSR’ approach is found to be more effective in

coordinating CSR activities worldwide (Filatotchev and Stahl, 2015:127).
A global template with variations and adaptations.
Corporate governance changes to enable a ‘transnational’ CSR approach
§ A shift from ’financial’ to ‘strategic’ controls
§ Managerial incentives based on the ‘triple bottom line’
§ Increase in board diversity, including stakeholder representation
§ Risks management systems include a wide range of economic and social factors
§ Accountability to a wider body of stakeholders
§ Non-hierarchical systems of communications between headquarters and subsidiaries
§ Board functional structures include a stakeholder relations committee
§ Investors engage with the firm’s board on CSR-related issues
Contingency factors influencing CSR implementation in MNCs and their supply chains
- Internally: CSR training, - Incorporation of codes of

experience sharing among conduct into performance
MNC employees measurement systems
- Externally: creation of - Groups, change agents

common frame of reference monitoring implementation
between MNC and suppliers of CSR policies
through training, visits,
dialogue
- Size of company, financial - Tradition of the company

resources, reputation, design working with environmental,
of global supply chain social issues, history of
relationships with suppliers
Source: Andersen, M. and T. Skjoett-Larsen (2009)‘Corporate social responsibility in global supply chains.’ Supply Chain Management: An
International Journal 14/2: 75-86.
Essential reading
§ Andersen, M. & T. Skjoett-Larsen (2009). Corporate social responsibility in global

supply chains. Supply Chain Management: An International Journal, 14/2, 75-86.
§ Filatotchev, I. & G. K. Stahl (2015). Towards transnational CSR: Corporate social

responsibility approaches and governance solutions for multinational
corporations. Organizational Dynamics, 44, 121-129.
§ Zadek, S. (2004). The path to corporate responsibility. Harvard Business Review,

82/12 (December), 125-132.
Global knowledge management
Topic 7
Key objectives
§ Differentiating national subsidiaries’ roles
§ Creation of Centres of Excellence
§ Barriers to effective global knowledge management
§ Mechanisms to develop global knowledge management capabilities

Differentiated roles for national subsidiaries
Strategic importance of local environment
High Low
High
Competence of local organisation
Strategic leader Contributor
Black hole Implementer
Low
Source: Bartlett & Ghoshal (1986)

Strategic leader
§ The subsidiary serves as a partner of the HQ in

developing and implementing strategy.
§ A sensor for detecting signals of change. Strategic Contributor

leader
§ A help in analysing the threats and opportunities and

developing appropriate responses. Black hole Implementer
HIGH Strategic importance of local

environment
HIGH Competence of local
organisation
Example: UK subsidiary of Philips (Dutch electronics company) in building
the company’s leadership position in the teletext -TV business

Contributor
§ Valuable subsidiary expertise.
§ Can be channelled toward projects of corporate Strategic

leader
Contributor
importance.
LOW Strategic importance of local

Example: Australian subsidiary of Ericsson (Swedish networking and environment
telecommunications company), in developing AXE digital HIGH Competence of local
organisation
telecommunications switch

Implementer
§ No access to critical information, and having to

control scarce resources.
Strategic Contributor
leader
§ Lack the potential to become contributors to the
company’s strategic planning. Black hole Implementer
LOW Strategic importance of local

environment
Example: Procter & Gamble’s European introduction of Vizir, the LOW Competence of local organisation
French company played an important contributing role by undertaking

a second market test and later modifying the advertising approach.

Black hole
§ Important markets, where strong local presence is

essential for maintaining the company’s global
position, but the local company hardly makes a
dent. Strategic Contributor
leader
§ Not an acceptable strategic position - the

objective is to manage one’s way out of it
HIGH Strategic importance of local
environment
LOW Competence of local organisation
Example: Philips in Japan, Ericsson in the United States, and

Matsushita in Germany are black holes.

Differentiating subsidiaries’ roles
Some managerial implications
§ Headquarters should set a common strategic direction

§ This need is particularly strong in an organisation in which tasks are
differentiated and responsibilities dispersed.
§ Headquarters should build the differentiated network

§ E.g. allocate roles (e.g., implementer, leader) and ensure subsidiaries’
participation in corporate decision-making.
§ Headquarters should direct the process

§ E.g. to ensure that the several roles are coordinated and that the distributed
responsibilities are controlled.

Key take-home message
§ International companies are exposed to a wide range of stimuli:

§ Customer preferences,
§ Competitive behaviour,
§ Government demands,
§ Sources of technological information.
§ These represent potential source of innovation and learning for the company
§ To capitalise on this advantage:

§ The organisation should be responsive in absorbing information,
§ National companies must be recognised as sources of expertise,
§ A cooperative effort works better than centralised direction.

Centres of excellence (COEs)
‘An organisational unit that embodies a set of capabilities that has

been explicitly recognised by the firm as an important source of
value creation, with the intention that these capabilities be leveraged
by and/or disseminated to other parts of the firm’
(Frost et al. 2002: pp. 997).
[focus on centres of excellence within foreign subsidiaries]
Source: Frost, T. S., Birkinshaw, J. M. and P. C. Ensign (2002) ‘Centres of excellence in multinational corporations.’ Strategic
Management Journal (23/11): 997-1018.
Under what conditions do COEs emerge?
Under what conditions do foreign subsidiaries develop a set of advanced capabilities that are
recognised by the parent as an important source of value creation for the MNC?
Conditions under which a COE emerges in MNCs
DETERMINANTS OF CENTERS OF EXCELLENCE FORMATION
Source: Frost et al. (2002)

When is a subsidiary more likely to contain a COE?
EXTERNAL FACTORS
§ Hypothesis 1: The greater the strength and dynamism of the local industry
‘diamond’, the more likely is the subsidiary to contain a centre of excellence.
(GOOD LOCATION) NOT supported
Note:
these are hypotheses
tested in the study
§ Hypothesis 2: The greater the impact of external organizations on the à not all of them are
development of a subsidiary’s competence, the more likely it is to contain a supported
centre of excellence. (GOOD CONNECTIONS) Supported generally

Porter’s national diamond
Government policy
The framework Firm Strategy,
seeks to explain Chance
Structure and
how a nation can
achieve Rivalry
competitiveness
in a given Factor
industry. Demand
Conditions Conditions
Four attributes
promote or
impede the Related and
creation of Supporting
competitive Industries
advantage.
Source: Dicken, P. (2014) Global Shift: Mapping the Changing Contours of the World Economy. Sage.
Specifically, Chapter 6 ‘The State Really does Matter’, p. 184 or Hill & Hult, (2017) International Business. McGraw-Hill Sub-section entitled ‘National Competitive advantage
- Porter’s Diamond’, p. 181-184 (part of Chapter 6 ‘International trade theory’).
When is a subsidiary more likely to contain a COE?
INTERNAL FACTORS
§ Hypothesis 3: The greater the impact of other units within the multinational
network on the development of a subsidiary’ s competence, the more likely
it is to contain a centre of excellence. (GOOD CONNECTIONS) Supported generally
Note:
§ Hypothesis 4: The greater the investment made by the parent firm in the these are hypotheses
subsidiary, the more likely it is to contain a centre of excellence. Supported tested in the study
à not all of them are
§ Hypothesis 5: The greater the autonomy of the subsidiary, the more likely it is to supported
contain a centre of excellence. NOT supported

Outcome: Performance
§ The superior capabilities and the greater-

than-unit locus of exploitation for these
capabilities drive positive performance
on several possible dimensions, including:
profitability, competitiveness, innovation,
and learning
BUT
§ Performance, in turn, influences the

COE’s formation process, e.g. by inducing
greater levels of firm investment in the
unit.
Barriers to global knowledge management
Organisational-level factors
Seeker of help Provider of help
Unwillingness To Seek Input and Unwillingness To Help

Unwilling
Learn From Others Some employees are reluctant to

‘NotSome
invented here’
employees mayproblem
close ‘Hoarding ofthey
share what expertise’
know
themselves off to seek help from problem
those in others units
Inability To Seek and Find Inability To Work Together and

Expertise Transfer Knowledge
Unable
Even when employees are willing to Sometimes employees are willing to

‘Needle
seek in abusiness
help in other haystack’
units or work ‘Stranger’ problem
together but can’t easily transfer
problem
country subsidiaries, they may not be what they know (e.g., tacit or specific
able to find it or to search efficiently knowledge)
Source: Hansen & Nohria (2004)

Addressing barriers to global knowledge management
n Leadership
n HR procedures
n Lateral cross-unit mechanisms
Source: Hansen, M. and Nohria, N. (2004) ‘How to build collaborative advantage’. MIT Sloan Management Review 46/1 (Fall): 22-30.
Using management levers to reduce collaboration barriers across borders
Addressing barriers to cross-border knowledge management
§ Organisations should diagnose the source of cross-border collaboration

barriers and use the levers that address these sources.
§ Measures to develop cross-border collaboration are costly and should be

focused on deliverables.
Essential readings
§ Bartlett, C. and S. Ghoshal (1986) ‘Tap your subsidiaries for global reach.’
Harvard Business Review 64/6 (Nov-Dec): 87-94.
§ Frost, T. S., Birkinshaw, J. M. and P. C. Ensign (2002) ‘Centres of excellence in

multinational corporations.’ Strategic Management Journal (23/11): 997-1018.
§ Hansen, M. and Nohria, N. (2004) ‘How to build collaborative advantage’. MIT

Sloan Management Review 46/1 (Fall): 22-30.
International Entrepreneurship
Topic 8
Key objectives
§ Understand the “born global” (BG) concept and how it challenges traditional
internationalisation models
§ Explore the drivers of born-global firms
§ Explore the different types of “born global” firms
§ Examine the “born global” strategy

Born Global: International new venture
BG’s : “...business organisations that, from or near their founding, seek

superior international business performance from the application of
knowledge-based resources to the sale of outputs in multiple countries”
Knight and Cavusgil (2004, p. 124)
International New Ventures (INVs): “... a business organisation that, from

inception, seeks to derive significant competitive advantage from the use
of resources and the sale of outputs in multiple countries. The
distinguishing feature of these start-ups is that their origins are
international...”
Oviatt and McDougall (1994, p. 49)
=> Contrasts with the Uppsala, step-by-step internationalisation process

Types of born global firms
New International Market Makers
Few countries entered Many countries entered
Few value-chain
activities across Export/Import start-up Multinational Trader
countries
Many value-
chain activities Geographically Focused
Start-up Global Start-up
across countries
Source: Oviatt and McDougall, 2005

Drivers of BG firms…
§ Globalisation § Innovation
§ Deregulation and economic liberalisation § Technological competence
§ Homogeneity in tastes and preferences § Intangible knowledge-based capabilities
(universal needs) § International entrepreneurial orientation
(uniqueness + quality)
§ Small home markets § Modern communications & transport
infrastructure
§ Internationalising not a matter of choice, but
of survival
§ Market knowledge § Ease of forming networks and alliances

§ International marketing orientation § Leveraging foreign distributorship
§ Growth & proliferation of niche markets
Role of founders of BGs
§ BGs typically acquire requisite resources through the earlier experience of the
founding team.
§ Personal relationships and social capital is useful for successful rapid

internationalisation of BGs.
§ Founders’ ability to conceive, recognise, and exploit opportunities in international

markets are particularly important.
§ More likely if they have prior international experience through work or education.
§ BG founders are generally less risk averse, proactive, and tolerant of

ambiguity
§ Willing to leap into the dark!
Roles of governments and of country institutions
§ Governments can help drive the development of BGs through

various policies
§ E.g. Intellectual property protection, entrepreneurial culture, capital market
strengthening, facilitating exports through trade agreements
§ Country institutions can influence the existence of BGs

§ Impact on: skills, regulations that support businesses, celebration of
entrepreneurial activities etc.
Developmental trends of BGs
§ Most BGs initially started in small countries.
§ Small home market pushed the need to expand abroad.
§ In the beginning, they encounter scarce financial, human, and tangible

resources that characterise most new businesses.
§ Their newness and smaller size confers flexibility that provides key benefits
for succeeding in foreign markets.
§ Flexibility makes BGs agile and enhances their ability to transform product and process
innovations
§ BGs often start internationalizing by exporting or using other non-equity entry

modes.
§ Franchising and licensing.
Required readings
§ Cavusgil, S. T., & Knight, G. (2015). The born global firm: An entrepreneurial and
capabilities perspective on early and rapid internationalization. Journal of
International Business Studies, 46(1), 3–16.
§ Knight, G. A., & Cavusgil, S. T. (2004). Innovation organizational capabilities and

the born-global firm. Journal of International Business Studies, 35(2), 124–141.
§ Oviatt, B. M., & McDougall, P. P. (1994). Toward a Theory of International New

Ventures. Journal of International Business Studies, 25(1), 45–64.
Exam - some revision techniques
§ Start early
§ Identify key points and examples for each topic
§ Go over the same material quite quickly several times rather than spending a
long time on one occasion
§ Study alone for some of the time, but also in a group occasionally if this suits
you
Exam - writing tips
§ Spend equal time on answering each question as each question is weighted equally
§ Structure your answers. A clear line of reasoning, a well-structured argument
§ Check through your answers at the end

Support for coursework and exam
§ All queries on the coursework and the exam must be directed to

the Unit convenor, Dr Mariachiara Barzotto
§ Contact details: mb2602@bath.ac.uk
§ Check the course website on Moodle for: lecture handouts,

information related to case study exercises, assessments,
readings, administration, announcements etc.
Q&A
Thanks for listening
Mariachiara Barzotto
mb2602@bath.ac.uk

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Lecture - Topic 10

Managing the Multinational Enterprise – MN20604

§ Group course work: 25%

§ Individual examination: 75%

§ Coursework Assignment (25%)

§ The group coursework will consist of an analysis of an international

§ Guidelines in Moodle under Group Coursework Information

This MNC will be the object of your assignment.

§ How does the company compete internationally?Topics 2-3

§ How does the company manage corporate social responsibility (CSR)

The word count is 2,000 (with an allowance of minus or plus 10%)

SUBMISSION INTO MOODLE, under “Coursework assignment”

§ Quality and depth of analysis (30%)

§ Logical structure and quality of writing (20%)

• Your assignment should be uploaded through Moodle.

• Your assignment is to be fully and consistently referenced.

• The word limit:

§ Essay-type questions, submitted via Inspera, on campus

§ Answer TWO questions out of four questions

§ Questions are essay-type

§ Past exam papers are available from the library website

§ Readings marked as ‘essential’ constitute the core knowledge being

§ A laptop is the only equipment needed to complete your exam.

§ Ensure precision and rigour of your answer

§ Examples should be used in a succinct way to convincingly support your arguments

§ Original means examples gathered from your independent research

4. Logic, structure, clarity of answers

§ Clear, well-structured arguments

Not examined - not for revision:

§ Understanding conflicting environmental pressures for global integration

§ Forces for global integration

§ Forces for national responsiveness

Source: Bartlett et al. (2008) Chapter 2

Forces for global Forces for national

Bartlett et al. (2008) Chapter 2

Bartlett et al. (2008) Chapter 2

Consumer Electronics Pharmaceuticals

National Responsiveness Forces

Bartlett, Ghoshal & Beamish (2011) 'Understanding the international context:

§ Types of MNEs’ competitive strategies

Need for global coordination

Low Low High

Their internationalisation process relies on transferring new

products, processes, or strategies developed in the home country

Global Strategy Pros: efficiency

Bartlett et al., 2008

characteristics and government regulations (local-for-local

• Strategic orientation Pros:

- Decentralised and self-

Bartlett et al., 2008

International Multi-National Companies manage costs and revenues simultaneously, both

arise in many different parts of the world.

Transnational Strategy The transnational:

Bartlett et al., 2008

Transnational Strategy Pros:

Bartlett et al., 2008

Aggregation: The pursuit of increased scale in order to achieve greater

Arbitrage: The pursuit of flexibility in sourcing and market access in order

Adaptation: The pursuit of insight and innovation from markets, moving

§ Companies should usually pursue one or two As

Bartlett, Ghoshal & Beamish (2011) 'Developing transnational strategies: building

Ghemawat, P. (2007), 'Managing differences: The central challenge of global

§ Understanding ‘global mindset’