Transnational Corporations - Volume 25, Issue 1, 2018

This article examines the theoretical and empirical links between a new generation of industrial policy, which is rapidly emerging as a dominant paradigm in development economics, and foreign direct investment (FDI). It finds that thus far, the theoretical role of FDI in “new” industrial policy has been vague, despite openness to FDI being one of the characteristics which sets it apart from an “old” generation of industrial policy, which advocated protectionism. Based on primary and secondary research, the article argues that a set of interventions into the economies of low- and lower-middle-income countries combined with an in-depth understanding of the complex interactions involved in TNC subsidiary upgrading, the internationalization processes within TNCs, and TNC strategies and objectives on the part of policymakers, offers such countries the opportunity to maximize the benefits of FDI and move further up in global value chains.

In response to calls for more policy-relevant academic research, this paper undertakes a stewardship approach to examine an engaged scholarship policy programme targeted at supporting the internationalization of Small and Medium-Sized Enterprises (SMEs) in Scotland, namely the Global Companies Development Programme (GCDP). The study was undertaken by academics and included a combined formal evaluation and research study, a follow-up workshop and group interviews over a ten-year-period. This study extends the stewardship approach to the engaged scholarship context. The findings suggest that stakeholders view their collaboration as a “supra-organizational” formation through which they can identify and empathize with its objectives; require skilful boundary spanners who consistently promote the objectives of the collaboration in the participating organizations; and, accentuate effective knowledge generation and transfer to SME internationalization activities that reflect the outcomes of their collaboration. We discuss policy implications for the development of private-public and inter-agency partnerships.

This study draws on preliminary case evidence to explore the motivations and advisability of engagement by African multinational enterprises (MNEs) in outward foreign direct investment (FDI) activities outside their home region. It complements recent research on MNEs from emerging markets, focused on the BRICS (Brazil, the Russian Federation, India, China, and South Africa) economies, with virtually no attention to potentially important players from rising Africa. The MNEs explored in this study are active in the energy, manufacturing, construction, chemicals, agribusiness, extractive/mining, and financial services sectors, and they have investment footprints both in countries in the North and the South. Their investment decisions are motivated by the search for market opportunities, strategic assets/resources and performance-boosting relationships, though more advanced economies appear to attract more strategic asset-seeking FDI from African MNEs. The paper argues that intra-regional investments by African MNEs should continue to be prioritized, but selective and strategic extra-regional FDI, undertaken with an eye on furthering global competitiveness, also requires appropriate policy support. This seems even more sensible given that the acceleration of borderless digital internationalization and the increasingly blurred nationality of MNE affiliates are lessening the relevance of regional distinctions.

As multinational enterprises increasingly disaggregate their value chains and assign functional responsibilities to foreign subsidiaries, they are increasingly focused on augmenting spatially distant activities and resources. At the same time, despite subsidiary managers operating at the “middle” of the organization and having awareness of operational and strategic contexts, they have received significant criticism for hindering the successful coordination and integration of value chain activities. This appears counterintuitive as, on the one hand, MNEs are increasingly disaggregating their value chains and, on the other, subsidiary managers act as frontline managers, at the intersection of their local context and the MNE. We examine the resource stocks of six subsidiaries and the activities of subsidiary managers locally and across global value chains. The results indicate that integration responsibilities are decentralized, as properties of subsidiary mandates, and that the subsidiary managers’ connectivity activities significantly affect the strategic influence that they subsidiary can exercise locally and globally. The results also contain important information for policymakers.

The digital economy is becoming an ever more important part of the world economy. It is revolutionizing the way we do business, and it has important implications for foreign direct investment (FDI). However, little systematic analysis has been done to investigate the investment patterns of digital multinational enterprises (MNEs). This study, conducted in the context of UNCTAD’s World Investment Report 2017 (WIR17), is an attempt to fill some of the gap in knowledge and to provide an impetus for future research. It proposes a new interpretative framework for the digital economy, builds an extensive sample of digital and ICT MNEs, and profiles their international operations. Its main findings are that MNEs in highly digitalized industries have a “lighter” FDI footprint than traditional MNEs; they tend to concentrate their operations in a few highly developed countries and their investment patterns are shaped by fiscal and financial motives more than those of traditional MNEs. As digital technologies and business models tend to disseminate across the broader economy, this may suggest the onset of a new era of international production and MNE internationalization paths. This paper sheds light on the methodology underpinning the analysis in WIR17 to ensure full replicability and to prepare the ground for further work in the area. It also builds further on the discussion in WIR17, proposing broader implications for international business and new avenues for future research.

The world has changed dramatically over the last two decades, moving through two distinct phases of globalization. Tapping into the rapid growth of goods and services trade (WTO, 2016a), the first wave of globalization was propelled by value chains, enhancing specialization, productivity and access to markets (Reeves and Harnos, 2017; OECD, 2017). The second is marked by digitalization and it is characterized by the flow of ideas, information and innovation, which has further enabled the exploitation of global business opportunities through internet applications.