Jordan I. Siegel

Associate Professor of Business Administration (Leave of Absence)

Jordan Siegel is an Associate Professor in the Strategy unit at Harvard Business School.   Here are links to his current papers, to his publications, to the HBS International Seminar Series, and to the HBS International Research Conference.

Jordan Siegel is an Associate Professor in the Strategy unit at Harvard Business School. He teaches Global Strategic Management in the M.B.A. program and Economics of International Business in the doctoral program. He also teaches Global Strategic Management in the Executive Education program.  Siegel's research focuses on how companies can best manage institutional differences across countries. He has written on how firms can rent foreign institutions as a means of substituting for weak governance institutions at home, on how labor market institutions impact the design and success of global business strategies, and on how culture impacts the decision of where to locate foreign direct investments. In the course of this research, Professor Siegel has done extensive fieldwork in Latin America and East Asia. His work has been published in the Journal of Financial Economics, Administrative Science Quarterly, the Review of Financial Studies, Management Science, Organization Science, the Journal of International Business Studies, and the Journal of Economic Literature.

Journal Articles

  1. Egalitarianism, Cultural Distance, and Foreign Direct Investment: A New Approach

    This study addresses an apparent impasse in the research on organizations' responses to cultural distance. Using historically motivated instrumental variables, we observe that egalitarianism distance has a negative causal impact on FDI flows. This effect is robust to a broad set of competing accounts, including the effects of other cultural dimensions, various features of the prevailing legal and regulatory regimes, other features of the institutional environment, economic development, and time-invariant unobserved characteristics of origin and host countries. We further show that egalitarianism correlates in a conceptually compatible way with an array of organizational practices pertinent to firms' interactions with non-financial stakeholders, such that national differences in these egalitarianism-related features may affect firms' international expansion decisions.

    Keywords: FDI; foreign direct investment; neo-institutionalism; multinational firm; cultural distance; egalitarianism; regulatory arbitrage; Pollution Haven Hypothesis; Foreign Direct Investment; Global Strategy; Culture; Entrepreneurship;

    Citation:

    Siegel, Jordan I., Amir N. Licht, and Shalom H. Schwartz. "Egalitarianism, Cultural Distance, and Foreign Direct Investment: A New Approach." Organization Science 23, no. 5 (September–October 2012). (This study addresses an apparent impasse in the research on organizations' responses to cultural distance. Using historically motivated instrumental variables, we observe that egalitarianism distance has a negative causal impact on FDI flows. This effect is robust to a broad set of competing accounts, including the effects of other cultural dimensions, various features of the prevailing legal and regulatory regimes, other features of the institutional environment, economic development, and time-invariant unobserved characteristics of origin and host countries. We further show that egalitarianism correlates in a conceptually compatible way with an array of organizational practices pertinent to firms' interactions with non-financial stakeholders, such that national differences in these egalitarianism-related features may affect firms' international expansion decisions.)
  2. A Reexamination of Tunneling and Business Groups: New Data and New Methods

    One of the most rigorous methodologies in the corporate governance literature uses firms' reactions to industry shocks to characterize the quality of governance. This methodology can produce the wrong answer unless one considers the ways firms compete. Because macro-level shocks reverberate differently at the firm level depending on whether a firm has a cost structure that requires significant adjustment, the quality of governance can only be elucidated accurately analyzing a firm's business strategy and their corporate governance. These differences can help one determine whether the fruits of a positive macro-level shock have been expropriated by insiders. Using the example of Indian firms, we show that an influential finding is reversed when these differences are considered. We further argue that the conventional wisdom about tunneling and business groups will need to be reformulated in light of the data, methodology, and findings presented here.

    Keywords: corporate governance; mergers and acquisitions; business economics; firm organization; firm performance; Groups and Teams; Data and Data Sets;

    Citation:

    Siegel, Jordan I., and Prithwiraj Choudhury. "A Reexamination of Tunneling and Business Groups: New Data and New Methods." Review of Financial Studies 25, no. 6 (June 2012): 1763–1798. (One of the most rigorous methodologies in the corporate governance literature uses firms' reactions to industry shocks to characterize the quality of governance. This methodology can produce the wrong answer unless one considers the ways firms compete. Because macro-level shocks reverberate differently at the firm level depending on whether a firm has a cost structure that requires significant adjustment, the quality of governance can only be elucidated accurately analyzing a firm's business strategy and their corporate governance. These differences can help one determine whether the fruits of a positive macro-level shock have been expropriated by insiders. Using the example of Indian firms, we show that an influential finding is reversed when these differences are considered. We further argue that the conventional wisdom about tunneling and business groups will need to be reformulated in light of the data, methodology, and findings presented here.)
  3. Egalitarianism and International Investment

    This study identifies the effect of a key cultural dimension—egalitarianism—on a set of international investment outcomes. Egalitarianism expresses a society's cultural orientation with respect to intolerance for abuses of market and political power. We show egalitarianism to be based on exogenous factors including social fractionalization, religion, and war experience. Controlling for a large set of competing explanations, we find a robust influence of egalitarianism distance on cross-border investment flows of equity, debt, and mergers and acquisitions. An informal cultural institution largely determined a century or more ago, egalitarianism influences international investment via an associated set of consistent policy choices made in recent years. But even after controlling for these associated policy choices, egalitarianism continues to exercise a direct effect on cross-border investment flows, likely through its direct influence on managers' daily business conduct.

    Keywords: egalitarianism; international investment; culture; cultural distance; foreign direct investment; informal institutions; social institutions; mergers and acquisitions; cross-listing; Investment; Equality and Inequality; Mergers and Acquisitions;

    Citation:

    Siegel, Jordan I., Amir N. Licht, and Shalom H. Schwartz. "Egalitarianism and International Investment." Journal of Financial Economics 102, no. 3 (December 2011). (This study identifies the effect of a key cultural dimension - egalitarianism - on a set of international investment outcomes. Egalitarianism expresses a society's cultural orientation with respect to intolerance for abuses of market and political power. We show egalitarianism to be based on exogenous factors including social fractionalization, religion, and war experience. Controlling for a large set of competing explanations, we find a robust influence of egalitarianism distance on cross-border investment flows of equity, debt, and mergers and acquisitions. An informal cultural institution largely determined a century or more ago, egalitarianism influences international investment via an associated set of consistent policy choices made in recent years. But even after controlling for these associated policy choices, egalitarianism continues to exercise a direct effect on cross-border investment flows, likely through its direct influence on managers' daily business conduct.)
  4. Political Instability: Effects on Financial Development, Roots in the Severity of Economic Inequality

    We here bring forward strong evidence that political instability impedes financial development, with its variation a primary determinant of differences in financial development around the world. As such, it needs to be added to the short list of major determinants of financial development. First, structural conditions first postulated by Engerman and Sokoloff (2002) as generating long-term inequality are shown here empirically to be exogenous determinants of political instability. Second, that exogenously-determined political instability in turn holds back financial development, even when we control for factors prominent in the last decade's cross-country studies of financial development. The findings indicate that inequality-perpetuating conditions that result in political instability are fundamental roadblocks for international organizations like the World Bank that seek to promote financial development. The evidence here includes country fixed effect regressions and an instrumental model inspired by Engerman and Sokoloff's (2002) work, which to our knowledge has not yet been used in finance and which is consistent with current tests as valid instruments. Four conventional measures of national political instability — Alesina and Perotti's (1996) well-known index of instability, a subsequent index derived from Banks' (2005) work, and two indices of managerial perceptions of nation-by-nation political instability — persistently predict a wide range of national financial development outcomes for recent decades. Political instability's significance is time consistent in cross-sectional regressions back to the 1960's, the period when the key data becomes available, robust in both country fixed-effects and instrumental variable regressions, and consistent across multiple measures of instability and of financial development. Overall, the results indicate the existence of an important channel running from structural inequality to political instability, principally in nondemocratic settings, and then to financial backwardness. The robust significance of that channel extends existing work demonstrating the importance of political economy explanations for financial development and financial backwardness. It should help to better understand which policies will work for financial development, because political instability has causes, cures, and effects quite distinct from those of many of the key institutions most studied in the past decade as explaining financial backwardness.

    Keywords: financial development; political instability; Government and Politics; Finance; Growth and Development; Economics; Equality and Inequality;

    Citation:

    Roe, Mark J., and Jordan I. Siegel. "Political Instability: Effects on Financial Development, Roots in the Severity of Economic Inequality." Journal of Comparative Economics 39, no. 3 (September 2011): 279–309. (We here bring forward strong evidence that political instability impedes financial development, with its variation a primary determinant of differences in financial development around the world. As such, it needs to be added to the short list of major determinants of financial development. First, structural conditions first postulated by Engerman and Sokoloff (2002) as generating long-term inequality are shown here empirically to be exogenous determinants of political instability. Second, that exogenously-determined political instability in turn holds back financial development, even when we control for factors prominent in the last decade's cross-country studies of financial development. The findings indicate that inequality-perpetuating conditions that result in political instability are fundamental roadblocks for international organizations like the World Bank that seek to promote financial development. The evidence here includes country fixed effect regressions and an instrumental model inspired by Engerman and Sokoloff's (2002) work, which to our knowledge has not yet been used in finance and which is consistent with current tests as valid instruments. Four conventional measures of national political instability — Alesina and Perotti's (1996) well-known index of instability, a subsequent index derived from Banks' (2005) work, and two indices of managerial perceptions of nation-by-nation political instability — persistently predict a wide range of national financial development outcomes for recent decades. Political instability's significance is time consistent in cross-sectional regressions back to the 1960's, the period when the key data becomes available, robust in both country fixed-effects and instrumental variable regressions, and consistent across multiple measures of instability and of financial development. Overall, the results indicate the existence of an important channel running from structural inequality to political instability, principally in nondemocratic settings, and then to financial backwardness. The robust significance of that channel extends existing work demonstrating the importance of political economy explanations for financial development and financial backwardness. It should help to better understand which policies will work for financial development, because political instability has causes, cures, and effects quite distinct from those of many of the key institutions most studied in the past decade as explaining financial backwardness.)
  5. Labor Market Institutions and Global Strategic Adaptation: Evidence from Lincoln Electric

    Although one of the central questions in the global strategy field is how multinational firms successfully navigate multiple and often conflicting institutional environments, we know relatively little about the effect of conflicting labor market institutions on multinational firms' strategic choice and operating performance. With its decision to invest in manufacturing operations in nearly every one of the world's largest welding markets, Lincoln Electric offers us a quasi-experiment. We leverage a unique data set covering 1996–2006 that combines data on each host country's labor market institutions with data on each subsidiary's strategic choices and historical operating performance. We find that Lincoln Electric performed significantly better in countries with labor laws and regulations supporting manufacturers' interests and in countries that allowed the free use of both piecework and a discretionary bonus. Furthermore, we find that in countries with labor market institutions unfriendly to manufacturers, Lincoln Electric was still able to overcome most (although not all) of the institutional distance by what we term flexible intermediate adaptation.

    Keywords: institutions; labor market; Complementarity; Global Strategy; Multinational Firms and Management; Governing Rules, Regulations, and Reforms; Labor Unions; Laws and Statutes; Operations; Organizational Change and Adaptation; Manufacturing Industry;

    Citation:

    Siegel, Jordan I., and Barbara Zepp Larson. "Labor Market Institutions and Global Strategic Adaptation: Evidence from Lincoln Electric." Management Science 55, no. 9 (September 2009): 1527–1546. (Although one of the central questions in the global strategy field is how multinational firms successfully navigate multiple and often conflicting institutional environments, we know relatively little about the effect of conflicting labor market institutions on multinational firms' strategic choice and operating performance. With its decision to invest in manufacturing operations in nearly every one of the world's largest welding markets, Lincoln Electric offers us a quasi-experiment. We leverage a unique data set covering 1996–2006 that combines data on each host country's labor market institutions with data on each subsidiary's strategic choices and historical operating performance. We find that Lincoln Electric performed significantly better in countries with labor laws and regulations supporting manufacturers' interests and in countries that allowed the free use of both piecework and a discretionary bonus. Furthermore, we find that in countries with labor market institutions unfriendly to manufacturers, Lincoln Electric was still able to overcome most (although not all) of the institutional distance by what we term flexible intermediate adaptation.)
  6. Finance and Politics: A Review Essay Based on Kenneth Dam's Analysis of Legal Traditions in The Law-Growth Nexus

    Strong financial markets are widely thought to propel economic development, with many in finance seeing legal tradition as fundamental to protecting investors sufficiently for finance to flourish. Kenneth Dam finds that the legal tradition view inaccurately portrays how legal systems work, how laws developed historically, and how government power is allocated in the various legal traditions. Yet, after probing the legal origins' literature for inaccuracies, Dam does not deeply develop an alternative hypothesis to explain the world's differences in financial development. Nor does he challenge the origins core data, which could be origins' trump card. Hence, his analysis will not convince many economists, despite that his legal learning suggests conceptual and factual difficulties for the legal origins explanations. Yet, a dense political economy explanation is already out there and the origins-based data has unexplored weaknesses consistent with Dam's contentions. Knowing if the origins view is truly fundamental, flawed, or secondary is vital for financial development policy making because policymakers who believe it will pick policies that imitate what they think to be the core institutions of the preferred legal tradition. But if they have mistaken views, as Dam indicates they might, as to what the legal traditions' institutions really are and which types of laws are effective, or what is really most important to financial development, they will make policy mistakes—potentially serious ones.

    Keywords: financial development; economic development; Kenneth Dam; Finance; Government and Politics; Information; Law;

    Citation:

    Roe, Mark J., and Jordan I. Siegel. "Finance and Politics: A Review Essay Based on Kenneth Dam's Analysis of Legal Traditions in The Law-Growth Nexus." Journal of Economic Literature 47, no. 3 (September 2009): 781–800. (Strong financial markets are widely thought to propel economic development, with many in finance seeing legal tradition as fundamental to protecting investors sufficiently for finance to flourish. Kenneth Dam finds that the legal tradition view inaccurately portrays how legal systems work, how laws developed historically, and how government power is allocated in the various legal traditions. Yet, after probing the legal origins' literature for inaccuracies, Dam does not deeply develop an alternative hypothesis to explain the world's differences in financial development. Nor does he challenge the origins core data, which could be origins' trump card. Hence, his analysis will not convince many economists, despite that his legal learning suggests conceptual and factual difficulties for the legal origins explanations. Yet, a dense political economy explanation is already out there and the origins-based data has unexplored weaknesses consistent with Dam's contentions. Knowing if the origins view is truly fundamental, flawed, or secondary is vital for financial development policy making because policymakers who believe it will pick policies that imitate what they think to be the core institutions of the preferred legal tradition. But if they have mistaken views, as Dam indicates they might, as to what the legal traditions' institutions really are and which types of laws are effective, or what is really most important to financial development, they will make policy mistakes—potentially serious ones.)
  7. Is There a Better Commitment Mechanism than Cross-Listings for Emerging Economy Firms? Evidence from Mexico

    The last decade of work in corporate governance has shown that weak legal institutions at the country level hinder firms in emerging economies from accessing finance and technology affordably. To attract outside resources, these firms must often use external commitments for repayment. Research suggests that a common commitment mechanism is to borrow US securities laws, which involves listing the emerging economy firm's shares on a US exchange. This paper uses a quasi-natural experiment from Mexico to examine the conditions under which forming a strategic alliance with a foreign multinational firm is actually a superior mechanism for ensuring good corporate governance.

    Keywords: commitment; inter-organizational relationships; emerging markets; economics; international political economy; Economy; Business Ventures; Information; Mexico;

    Citation:

    Siegel, Jordan I. "Is There a Better Commitment Mechanism than Cross-Listings for Emerging Economy Firms? Evidence from Mexico." Journal of International Business Studies 40, no. 7 (September 2009): 1171–1191. (The last decade of work in corporate governance has shown that weak legal institutions at the country level hinder firms in emerging economies from accessing finance and technology affordably. To attract outside resources, these firms must often use external commitments for repayment. Research suggests that a common commitment mechanism is to borrow US securities laws, which involves listing the emerging economy firm's shares on a US exchange. This paper uses a quasi-natural experiment from Mexico to examine the conditions under which forming a strategic alliance with a foreign multinational firm is actually a superior mechanism for ensuring good corporate governance.)
  8. Contingent Political Capital and International Alliances: Evidence from South Korea

    Though prior research has suggested that a company's ties to political networks have only a positive value or no value, this study examines whether political network ties can also be a significant liability for companies. Analyzing South Korea as a representative emerging economy, I find that being tied through elite sociopolitical networks to the regime in power significantly increased the rate at which South Korean companies formed cross-border strategic alliances, but also that being tied through elite sociopolitical networks to the political enemies of the regime in power significantly decreased that rate. Results show that an unexpected change in political regime could quickly change a political liability into an asset and that network ties continued to be important determinants of cross-border alliance activity as South Korea proceeded with liberalization. The present study sheds further light on the so-called dark side of embeddedness by focusing on who is negatively targeted by having the "wrong friends" at the wrong time. Just as positive ties can lead to favor exchange and other benefits for companies, negative ties can lead companies to be the victims of discrimination, resource exclusion, and even occasional expropriation and sabotage between rival sociopolitical networks.

    Keywords: political networks; sociopolitical networks; Government and Politics; Capital; Alliances; South Korea;

    Citation:

    Siegel, Jordan I. "Contingent Political Capital and International Alliances: Evidence from South Korea." Administrative Science Quarterly 52, no. 4 (December 2007): 621 – 666. (Though prior research has suggested that a company's ties to political networks have only a positive value or no value, this study examines whether political network ties can also be a significant liability for companies. Analyzing South Korea as a representative emerging economy, I find that being tied through elite sociopolitical networks to the regime in power significantly increased the rate at which South Korean companies formed cross-border strategic alliances, but also that being tied through elite sociopolitical networks to the political enemies of the regime in power significantly decreased that rate. Results show that an unexpected change in political regime could quickly change a political liability into an asset and that network ties continued to be important determinants of cross-border alliance activity as South Korea proceeded with liberalization. The present study sheds further light on the so-called dark side of embeddedness by focusing on who is negatively targeted by having the "wrong friends" at the wrong time. Just as positive ties can lead to favor exchange and other benefits for companies, negative ties can lead companies to be the victims of discrimination, resource exclusion, and even occasional expropriation and sabotage between rival sociopolitical networks.)
  9. Can Foreign Firms Bond Themselves Effectively by Renting U.S. Securities Laws?

    The study tests the functional convergence hypothesis, which states that foreign firms can leapfrog their countries' weak legal institutions by listing equities in New York and agreeing to follow U.S. securities law. Evidence shows that the SEC and minority shareholders have not effectively enforced the law against cross-listed foreign firms. Detailed evidence from Mexico further shows that while some insiders exploited this weak legal enforcement with impunity, others that issued a cross-listing and passed through an economic downturn with a clean reputation went on to receive privileged long-term access to outside finance. As compared with legal bonding, reputational bonding better explains the success of cross-listings.

    Keywords: corporate governance; cross-listing; reputation; bonding; Business Ventures; Laws and Statutes; Financial Instruments; United States; Mexico;

    Citation:

    Siegel, Jordan I. "Can Foreign Firms Bond Themselves Effectively by Renting U.S. Securities Laws?" Journal of Financial Economics 75, no. 2 (February 2005): 319–359. (The study tests the functional convergence hypothesis, which states that foreign firms can leapfrog their countries' weak legal institutions by listing equities in New York and agreeing to follow U.S. securities law. Evidence shows that the SEC and minority shareholders have not effectively enforced the law against cross-listed foreign firms. Detailed evidence from Mexico further shows that while some insiders exploited this weak legal enforcement with impunity, others that issued a cross-listing and passed through an economic downturn with a clean reputation went on to receive privileged long-term access to outside finance. As compared with legal bonding, reputational bonding better explains the success of cross-listings.)

Books

  1. Cases about Redefining Global Strategy

    In "Cases about Redefining Global Strategy," Pankaj Ghemawat and Jordan Siegel have assembled 26 full-length case studies as a resource for active learning about the nature of cross-border differences and strategies. As technology innovation globalizes markets and firms, management education must adopt a truly modern perspective on globalization-one that illuminates differences across borders rather than emphasizing similarities and imposing local models onto far-flung cultures. A new generation of managers and innovators who must compete in a "flat" world cannot succeed while following a one-size-fits-all approach to global strategy. Pankaj Ghemawat, Professor of Strategy at Spain's IESE Business School and author of "World 3.0" and "Redefining Global Strategy," and Harvard Business School Professor Jordan Siegel represent a new era of thinking in global strategy. This carefully chosen selection of classics and new material from Harvard Business Publishing also includes an introduction and six introductory module notes that identify key themes and strategic concepts explored in the cases. Though attuned to the format of an MBA course, the cases and text may also be used individually or in programs outside the strategy curriculum.

    Keywords: global strategy; globalization; international business; Cases; Strategy; Globalization;

    Citation:

    Ghemawat, Pankaj, and Jordan I. Siegel. Cases about Redefining Global Strategy. Boston: Harvard Business Publishing, 2011.

Book Chapters

  1. The Small Worlds of Business Groups: Liberalization and Network Dynamics

    Citation:

    Brookfield, Jon, Sea-Jin Chang, Israel Drori, Shmuel Ellis, Sergio G. Lazzarini, Jordan I. Siegel, and Juan Pablo von Bernath Bardina. "The Small Worlds of Business Groups: Liberalization and Network Dynamics." Chap. 3 in The Small Worlds of Corporate Governance, edited by Bruce Kogut, 77–115. Cambridge, MA: MIT Press, 2012.
  2. The Social Dimensions of Entrepreneurship

    Schumpeter's canonical depiction of the entrepreneur as an agent of social and economic change implies that entrepreneurs are especially sensitive to the social environment. We use an organizing framework based on institutional economics, in combination with lessons from cross-cultural psychology, to consider the social dimensions of entrepreneurship. The level and modes of entrepreneurial activity are affected by the surrounding culture and by legal rules. Entrepreneurs may partially overcome institutional deficiencies by relying on social networks that facilitate reputational bonding as a means for resource-sharing.

    Keywords: entrepreneurship; social institutions; culture; law; social networks; reputation; Social Entrepreneurship; Corporate Social Responsibility and Impact;

    Citation:

    Licht, Amir, and Jordan I. Siegel. "The Social Dimensions of Entrepreneurship." In Oxford Handbook of Entrepreneurship, edited by Mark Casson, Bernard Yeung, Anuradha Basu, and Nigel Wadeson. Oxford: Oxford University Press, 2006.
  3. The Rise and Fall of the Widely Held Firm: A History of Corporate Ownership in Canada

    This chapter features an admirable effort by by Morck, Percy, Tian, and Yeung to apply recent developments in law and finance theory to a longitudinal country-level case study. The authors closely examine nearly 500 years of Canadian corporate governance and analyze the numerous institutional changes that occurred, particularly over the past two centuries. The fruits of the authors' efforts are a series of questions that can be asked about the underlying theory itself. This longitudinal case study points the way forward for a more complete and nuanced corporate governance theory that does not seek to find the one "magic bullet" institution that leads to better governance, but instead looks for strong and positive interaction effects between mutually reinforcing sets of institutions.

    Keywords: corporate governance theory; Corporate Governance; Canada;

    Citation:

    Siegel, Jordan I. Comment on "The Rise and Fall of the Widely Held Firm: A History of Corporate Ownership in Canada." A History of Corporate Governance around the World: Family Business Groups to Professional Managers, edited by Randall K. Morck. University of Chicago Press, 2006.
  4. Measuring the Value of Political Connections After Liberalization: Some Thoughts on Theoretical Constructs and Improved Research Design

    Scholars have recently begun to focus heightened attention on how firms in emerging economies react and even thrive during deep liberalization. Yet one fundamental question remains less than satisfactorily answered. How much in terms of scarce resources should firms in emerging economies allocate to acquire political connections relative to other purely market-based activities as R&D and marketing once liberalization deepens? In other words, given a constraint on available finance, technology and managerial time, how much should managers allocate to increasing "who they know" as opposed to "what they know" (Tung and Worm 2001)? Should firms react to liberalization more by managing their guanxi network or by investing all their resources in market-based technological and marketing capabilities? Some authors have suggested that deep liberalization requires that firms in emerging economies invest less and less on politics and more and more on R&D and marketing (Chang 2003; Guthrie 1999). Other authors suggest that it is precisely during liberalization that the returns to political connections increase relative to many other market-focused activities (e.g., Róna-Tas 1994).

    Keywords: liberalization; emerging economies; political connections; Business and Government Relations; Emerging Markets; Strategy;

    Citation:

    Siegel, Jordan I. "Measuring the Value of Political Connections After Liberalization: Some Thoughts on Theoretical Constructs and Improved Research Design." In Global Corporate Evolution: Looking Inward or Looking Outward, edited by Michael A. Trick. Carnegie-Mellon International Management Series. Pittsburgh: Carnegie Mellon University Press, 2004.

Working Papers

  1. Multinational Firms, Labor Market Discrimination, and the Capture of Competitive Advantage by Exploiting the Social Divide

    The organizational theory of the multinational firm holds that foreignness is a liability, and specifically that lack of embeddedness in host-country social networks is a source of competitive disadvantage; meanwhile the literature on labor market discrimination suggests that exploiting the bigotry of others can be a source of competitive advantage. We seek to turn the former literature somewhat on its head by building on insights from the latter. Specifically, we argue that multinationals wield a particularly significant competitive weapon: as outsiders, they can identify social schisms in host labor markets and exploit them for their own competitive advantage. Using two unique data sets from South Korea, we show that in the 2000s multinationals have derived significant advantage in the form of improved profitability by aggressively hiring an excluded group, women, in the local managerial labor market. Our results are economically meaningful, realistic in size, and robust to the inclusion of firm fixed effects. Multinationals, even those whose home markets discriminate against women, often show signs of having seen the strategic opportunity. Though the host market is moving toward a new equilibrium freer of discrimination, that movement is relatively slow, presenting a multiyear competitive opportunity for multinationals.

    Keywords: Prejudice and Bias; Human Capital; Selection and Staffing; Multinational Firms and Management; Competitive Advantage; Markets; Profit; Gender Characteristics; South Korea;

    Citation:

    Siegel, Jordan I., Lynn Pyun, and B.Y. Cheon. "Multinational Firms, Labor Market Discrimination, and the Capture of Competitive Advantage by Exploiting the Social Divide." Harvard Business School Working Paper, No. 11-011, August 2010. (Revised February 2014.)
  2. What Makes the Bonding Stick? A Natural Experiment Involving the U.S. Supreme Court and Cross-Listed Firms

    On March 29, 2010, the U.S. Supreme Court signaled its intention to geographically limit the reach of the U.S. securities antifraud regime and thus differentially exclude U.S.-listed foreign firms from the ambit of formal U.S. antifraud enforcement. We use this legal surprise as a natural experiment to test the legal bonding hypothesis. This event nonetheless was met with positive or indifferent market reactions based on matched samples, Brown-Warner, and portfolio analyses. These results challenge the value of at least the U.S. civil liability regime, as currently designed, as a legal bonding mechanism in such firms.

    Keywords: Crime and Corruption; International Finance; Investment; Corporate Governance; Governing Rules, Regulations, and Reforms; Courts and Trials; Legal Liability; United States;

    Citation:

    Licht, Amir N., Christopher Poliquin, Jordan I. Siegel, and Xi Li. "What Makes the Bonding Stick? A Natural Experiment Involving the U.S. Supreme Court and Cross-Listed Firms." Harvard Business School Working Paper, No. 11-072, January 2011. (Revised August 2013.)
  3. Cross-Border Reverse Mergers: Causes and Consequences

    We study non-U.S. companies that have used reverse mergers as a means to adopt U.S. corporate law (and sometimes U.S. securities law as well). Early adopters of cross-border reverse mergers and those firms that hired a Big Four auditor exhibited superior corporate governance outcomes. Later adopters of cross-border reverse mergers were likely to strategically mimic the early entrants only to gain access to U.S. capital markets—that is, they took some governance actions but not others—and are shown to be likely to have worse corporate governance outcomes over time. Firm-level origins in China initially appears to be a significant negative determinant of at least some corporate governance outcomes, but the variable loses its statistical power when examining the most comprehensive data set on cross-border reverse mergers yet assembled and when including a battery of relevant control variables. Adoption of Nevada's corporate law is associated with some of the most serious restatements involving real corporate governance and data manipulation problems. In summary, the evidence supports the existence of strategic mimicry, which the capital market did not fully discern for many years. It also supports the explanatory power of reputational bonding to explain the fact that adoption of U.S. institutions can be used either to build reputation or to exploit relatively weak U.S. cross-border law enforcement.

    Keywords: reverse merger; corporate law; corporate governance; Nevada; United States;

    Citation:

    Siegel, Jordan, and Yanbo Wang. "Cross-Border Reverse Mergers: Causes and Consequences." Harvard Business School Working Paper, No. 12-089, April 2012. (Revised December 2012, March 2013, September 2013.)
  4. Which Does More to Determine the Quality of Corporate Governance in Emerging Economies, Firms or Countries?

    Scholars of corporate governance have debated the relative importance of country and firm characteristics in understanding corporate governance variation across emerging economies. Using panel data and a number of model specifications, we shed new light on this debate. We find that firm characteristics are as important as and often meaningfully more important than country characteristics in explaining governance ratings variance. These results suggest that over recent years firms in emerging economies had more capability to rise above home-country peer firms in corporate governance ratings than has been previously suggested. In fact, 16.8% percent of firms in emerging economies have been able to exceed the 75th percentile of corporate governance ratings in developed economies and 45.5% of firms in emerging economies have been able to exceed the 50th percentile of corporate governance ratings in developed economies.

    Keywords: Quality; Corporate Governance; Developing Countries and Economies;

    Citation:

    Hugill, Andrea, and Jordan Siegel. "Which Does More to Determine the Quality of Corporate Governance in Emerging Economies, Firms or Countries?" Harvard Business School Working Paper, No. 13-055, December 2012. (Revised March 2013, June 2014.)
  5. The Unfairness Trap: A Key Missing Factor in the Economic Theory of Discrimination

    Prior evidence linking increased female representation in management to corporate performance has been surprisingly mixed, due in part to data limitations and methodological difficulties, and possibly to omission of a fairness factor in the economic theory of discrimination. We introduce a new theoretical emphasis on unfairness traps, and we test our theory on a panel data set covering managerial demography, corporate performance, and individual compensation from a nationally representative sample of Japanese firms in the 2000s. We find that increases in the ratio of female executives, the presence of at least one female executive, and the presence of at least one female section chief are associated with increases in corporate profitability in the manufacturing sector. These results are not specific to Japanese firms only: North American multinationals operating in Japan also experience outsized benefits from hiring and promoting female managers. The results are robust to controlling for time effects and company fixed effects and the time-varying use of temporary and part-time employees. A very small part of the competitive benefit of employing female managers does flow from compensation savings, but a far larger part arises from direct productivity increases. Prior economic theory on discrimination is largely silent on the impact of discrimination on worker productivity and hence cannot explain these findings. We extend the theory by modeling this relationship, and test it empirically by showing that due to possible social comparison costs, only companies whose compensation of female talent compares well with compensation in the local labor market for similarly qualified males will see a significant performance benefit.

    Keywords: Fairness; Managerial Roles; Performance Productivity; Gender Characteristics; Japan;

    Citation:

    Siegel, Jordan I., Naomi Kodama, and Hanna Halaburda. "The Unfairness Trap: A Key Missing Factor in the Economic Theory of Discrimination." Harvard Business School Working Paper, No. 13-082, March 2013. (Revised January 2014, June 2014.)

Cases and Teaching Materials

  1. Global Strategic Management

    Keywords: Globalization; Global Strategy; Globalized Firms and Management;

    Citation:

    Siegel, Jordan I. "Global Strategic Management." Harvard Business School Course Overview Note 713-531, June 2013.
  2. Microsoft in Korea

    Microsoft Korea sees a potential opportunity to dramatically improve its subsidiary's performance by actively recruiting and promoting female senior managers in South Korea. The question is to what extent multinationals can gain competitive advantage by actively hiring talented members from the so-called excluded group in a society. Related questions include which initiatives are most effective at implementing change in the organization.

    Keywords: global strategy; global; strategy; international business; multinational management; human resource management; human resources; labor market; global human resource management; Microsoft; South Korea; Asia; East Asia; Human Resources; Strategy; Global Strategy; Computer Industry; South Korea; East Asia;

    Citation:

    Siegel, Jordan I., and Lynn Pyun. "Microsoft in Korea." Harvard Business School Case 713-522, April 2013. (Revised November 2013.)
  3. Yum! Brands

    Yum!, the owner of KFC, Pizza Hut, and Taco Bell, asks what might be the lessons from its success in China for currently contemplated expansion into India and Africa. Also, the company contemplates whether Taco Bell can succeed abroad as part of a new expansion push. Also, the case asks what distance barriers are relevant for a fast food company specializing in part on fried chicken and Tex-Mex food.

    Keywords: international business; international marketing; Global Strategy; Competitive Strategy; Food and Beverage Industry; United States; Europe; Australia; Africa; Asia;

    Citation:

    Siegel, Jordan, and Christopher Poliquin. "Yum! Brands." Harvard Business School Case 712-422, May 2012. (Revised October 2012.)
  4. Global Strategic Management

    This module note provides introduction to the field of global strategic management/international business.

    Keywords: Globalization; Global Strategy; Globalized Firms and Management;

    Citation:

    Siegel, Jordan. "Global Strategic Management." Harvard Business School Module Note 711-456, November 2010. (Revised October 2012.)
  5. Baxter's Asia Pacific 'Talent Edge' Initiative

    This case examines whether multinationals have a potential competitive weapon in aggressively exploiting social schisms in host labor markets and in hiring and promoting senior managers from excluded groups.

    Keywords: Labor; Selection and Staffing; Groups and Teams;

    Citation:

    Siegel, Jordan, Mimi Xi, and Christopher Poliquin. "Baxter's Asia Pacific 'Talent Edge' Initiative." Harvard Business School Case 711-408, October 2010. (Revised March 2013.)
  6. Haier's U.S. Refrigerator Strategy

    Haier, the first Chinese consumer durable brand in the United States, succeeded in the compact refrigerator, freezer, and air conditioner markets and then built a U.S. factory to enter the full-size market. Issues include the value of a local entrepreneur to the Asian manufacturer entering the United States; brand building and price positioning; the sourcing location decision trade-off between production costs and logistics costs; the role of change in the U.S. appliance distribution channels; global and regional competitive analysis; the response of U.S. competitors to the global sourcing evolution; and the time horizons of Chinese company management.

    Keywords: Factories, Labs, and Plants; Global Strategy; Growth and Development Strategy; Brands and Branding; Market Entry and Exit; Competitive Strategy; Consumer Products Industry; China; United States;

    Citation:

    Ghemawat, Pankaj, Thomas M. Hout, and Jordan I. Siegel. "Haier's U.S. Refrigerator Strategy." Harvard Business School Case 705-475, February 2005. (Revised April 2011.)
  7. Haier's U.S. Refrigerator Strategy

    Keywords: Marketing Strategy; Manufacturing Industry; United States;

    Citation:

    Ghemawat, Pankaj, Thomas M. Hout, and Jordan Siegel. "Haier's U.S. Refrigerator Strategy." Harvard Business School Spreadsheet Supplement 712-803, December 2011.
  8. Haier's U.S. Refrigerator Strategy (TN)

    Teaching Note for #705-475.

    Citation:

    Ghemawat, Pankaj, Thomas M. Hout, Jordan I. Siegel, and Steven A. Altman. "Haier's U.S. Refrigerator Strategy (TN)." Harvard Business School Teaching Note 711-473, February 2011. (Revised April 2011.)
  9. The Globalization of East Asian Pop Music

    This case on the globalization of East Asian pop music is useful for teaching concepts of regional business strategy and also of cultural arbitrage. Music companies in the case must examine why certain markets are clearly more profitable than others. They must also decide whether to expand internationally with a regional focus on East Asia or, alternatively, a focus on the U.S. and other Western markets.

    Keywords: Profit; Globalization; Cross-Cultural and Cross-Border Issues; Business Strategy; Expansion; Music Industry; East Asia;

    Citation:

    Siegel, Jordan, and Yi Kwan Chu. "The Globalization of East Asian Pop Music." Harvard Business School Case 708-479, February 2008. (Revised April 2010.)
  10. The Globalization of East Asian Pop Music (TN)

    Teaching Note for 708479.

    Keywords: Music Entertainment; Business Strategy; Profit; Expansion; Globalization; Culture; East Asia; United States;

    Citation:

    Siegel, Jordan I. "The Globalization of East Asian Pop Music (TN)." Harvard Business School Teaching Note 710-481, April 2010.
  11. Edelnor (A)

    Fernando del Sol, president of F. S. Inversiones in Chile, had just bought himself a headache as a New Year's present. On December 31, 2001, he purchased a Chilean electricity generation and transmission company called Edelnor that was in danger of becoming insolvent within months. del Sol had six months to restructure the company before it would become completely insolvent, and his headache was compounded by the fact that the process for company reorganization in Chile typically dragged on in the courts, often for two or more years. Any debtor, no matter how small, could hold up the process at any point by issuing written complaints to the court. del Sol needed to figure out whether the company was worth saving, whether it had a business strategy that could succeed if the company's debt was restructured, and whether he could find some means of saving the company in time.

    Keywords: Restructuring; Insolvency and Bankruptcy; Investment; Courts and Trials; Business Strategy; Energy Industry; Chile;

    Citation:

    Siegel, Jordan I. "Edelnor (A)." Harvard Business School Case 707-473, February 2007. (Revised June 2009.)
  12. Edelnor (B)

    Citation:

    Siegel, Jordan I. "Edelnor (B)." Harvard Business School Supplement 707-530, February 2007. (Revised January 2009.)
  13. Edelnor (TN) (A) and (B)

    Teaching note to 707473 and 707530.

    Keywords: Insolvency and Bankruptcy; Restructuring; Mergers and Acquisitions; Business Strategy; Decision Choices and Conditions; Energy Industry; Chile;

    Citation:

    Siegel, Jordan I. "Edelnor (TN) (A) and (B)." Harvard Business School Teaching Note 707-550, March 2007. (Revised March 2013.)
  14. Databank in Africa

    This case tackles issues of regional strategy and strategic institutional arbitrage. Databank is a financial services firm designing its regional strategy for Africa and seeking to benefit from institutional arbitrage.

    Keywords: Developing Countries and Economies; Local Range; Emerging Markets; Service Operations; Business Strategy; Financial Services Industry; Africa;

    Citation:

    Siegel, Jordan, and Yi Kwan Chu. "Databank in Africa." Harvard Business School Case 708-478, March 2008. (Revised November 2008.)
  15. Databank in Africa (TN)

    Teaching Note for 708478.

    Keywords: Strategy; International Finance; Financial Services Industry; Africa;

    Citation:

    Siegel, Jordan I. "Databank in Africa (TN)." Harvard Business School Teaching Note 711-453, November 2010.
  16. Global Talent Management at Novartis

    This case tackles the topic of global talent management. It can be used to analyze the performance measurement, incentive, and talent development system used at a major multinational company. This case can also be used to analyze the extent to which this system should or should not be adapted for China and other emerging economies.

    Keywords: Talent and Talent Management; Developing Countries and Economies; Multinational Firms and Management; Performance Evaluation; Motivation and Incentives; Adaptation;

    Citation:

    Siegel, Jordan. "Global Talent Management at Novartis." Harvard Business School Case 708-486, February 2008. (Revised November 2008.)
  17. Global Talent Management at Novartis (TN)

    Teaching Note for 708486.

    Keywords: Performance Evaluation; Talent and Talent Management; System; Multinational Firms and Management; Motivation and Incentives; Developing Countries and Economies; Pharmaceutical Industry; China;

    Citation:

    Siegel, Jordan I. "Global Talent Management at Novartis (TN)." Harvard Business School Teaching Note 710-482, April 2010.
  18. Grupo Bimbo

    In 2007 Grupo Bimbo, a leading global player in the baking industry, expands into China while at the same time undertaking initiatives to make its U.S. and South American operations more profitable. Allows students to analyze the company's entire global strategy. Places particular attention on how a multinational firm should best adapt to differences in the basic institutions of capitalism and consumer preferences across countries as well as within them.

    Keywords: Cross-Cultural and Cross-Border Issues; Global Strategy; Multinational Firms and Management; Organizational Change and Adaptation; Business and Government Relations; Food and Beverage Industry; China; Mexico; United States; South America;

    Citation:

    Siegel, Jordan I. "Grupo Bimbo." Harvard Business School Case 707-521, March 2007. (Revised August 2009.)
  19. Grupo Bimbo (TN)

    Teaching note to 707521.

    Citation:

    Siegel, Jordan I. "Grupo Bimbo (TN)." Harvard Business School Teaching Note 707-551, March 2007. (Revised October 2008.)
  20. Samsung Electronics

    When is it possible to create a dual advantage of being both low cost and differentiated? In this case, students assess whether Samsung Electronics has been able to achieve such a dual advantage, and if so, how this was possible. Moreover, Samsung Electronics' long-held competitive advantage is under renewed attack. Students also can assess how Samsung should respond to large-scale Chinese entry into its industry.

    Keywords: Market Entry and Exit; Competitive Strategy; Competitive Advantage; Electronics Industry; China; South Korea;

    Citation:

    Siegel, Jordan I., and James Jinho Chang. "Samsung Electronics." Harvard Business School Case 705-508, June 2005. (Revised February 2009.)
  21. Samsung Electronics (TN)

    Keywords: Electronics Industry;

    Citation:

    Siegel, Jordan I., and James Jinho Chang. "Samsung Electronics (TN)." Harvard Business School Teaching Note 706-406, August 2005. (Revised March 2013.)
  22. Lincoln Electric

    The case describes Lincoln Electric's business strategy and incentive system, and it discusses the global strategy choices that the company faces going forward. Lincoln Electric is deciding whether a strong push into India should be the next step in the company's globalization. The company has enjoyed increasing success in China as a result of its aggressive expansion through both a joint venture and set of majority-owned plants. The company is deciding how it could apply the lessons of the Chinese experience, as well as the lessons of its experience across Asia, Europe, and Latin America, to India. First of all, should Lincoln Electric own a manufacturing operation in India? If yes, Lincoln Electric could enter the India market by acquisition, by joint venture, or by building a new plant on its own. If the company were to enter by acquisition, it was unclear what type of valuation to apply to any of the Indian incumbent companies. If the company were to enter by joint venture, the question was: How could Lincoln ensure its ability to make key business decisions? If the company were to build its own plant, the question was: Would the cost of starting from scratch be more than sufficiently compensated by the total control the company would enjoy?

    Keywords: Global Strategy; Globalized Firms and Management; Growth and Development Strategy; Business Strategy; Expansion; India;

    Citation:

    Siegel, Jordan I. "Lincoln Electric." Harvard Business School Case 707-445, November 2006. (Revised August 2008.)
  23. Lincoln Electric (TN)

    Keywords: Energy; Energy Industry;

    Citation:

    Siegel, Jordan I. "Lincoln Electric (TN)." Harvard Business School Teaching Note 707-552, March 2007. (Revised April 2010.)
  24. Lamoiyan Corporation of the Philippines: Challenging Multinational Giants (TN)

    Teaching note to 704405.

    Keywords: Competitive Strategy; Multinational Firms and Management; Growth and Development Strategy; Going Public; Product Development; Trade; Consumer Products Industry; Philippines;

    Citation:

    Coughlan, Peter J., Jordan I. Siegel, and John R. Wells. "Lamoiyan Corporation of the Philippines: Challenging Multinational Giants (TN)." Harvard Business School Teaching Note 707-554, March 2007.
  25. Introduction to Global Strategy

    Examines when it is profitable for a company to position part or all of its activity set across national borders and how a cross-border business is successfully designed and managed.

    Keywords: cross-border business; Globalized Firms and Management; Competitive Strategy; Global Strategy; Cross-Cultural and Cross-Border Issues;

    Citation:

    Siegel, Jordan I. "Introduction to Global Strategy." Harvard Business School Background Note 706-448, January 2006. (Revised March 2007.)
  26. Introduction to International Strategy

    Provides an overview framework for understanding international strategy. Observes that international strategy draws on much of the same theory as corporate strategy. The same tests that can be applied to justify expansion across businesses--the better off and ownership tests--also apply to expansion across borders. What is different about international strategy is that widening a firm's domain to the entire globe introduces substantively different degrees of heterogeneity, scale, and volatility across markets. These three factors create new opportunities and trade-offs for multinationals. Effective international strategy is based on a source of competitive advantage that capitalizes on one of these factors and aligns the configuration of all its activities in support of that advantage. Multinationals need to choose the products they offer, the countries in which they compete, the location of their activities, and their organizational design contingent on their international strategy.

    Keywords: international strategy; multinational corporations; Global Strategy;

    Citation:

    Collis, David J., and Jordan I. Siegel. "Introduction to International Strategy." Harvard Business School Module Note 706-481, January 2006. (Revised December 2006.)
  27. Borrowing Institutions

    Citation:

    Siegel, Jordan. "Borrowing Institutions." Harvard Business School Module Note 713-473, March 2013.
  28. Deliberative Democracy and the Case Method

    Citation:

    Siegel, Jordan I. "Deliberative Democracy and the Case Method." Harvard Business School Background Note 713-517, March 2013.
  29. Jazzed Up: A Global Strategy Manga (Graphic Novel) — Instructor Version

    Citation:

    Siegel, Jordan I. "Jazzed Up: A Global Strategy Manga (Graphic Novel) — Instructor Version." Harvard Business School Teaching Note 713-518, March 2013.
  30. Unilever's New Recipe for Growth

    This case looks at Unilever and its ongoing efforts at regional strategy and organizational change in Europe.

    Keywords: regional strategy; aggregation; Organizational change; Global Strategy; Consumer Products Industry; Europe;

    Citation:

    Siegel, Jordan, Christopher Poliquin, and Barbara Zepp Larson. "Unilever's New Recipe for Growth ." Harvard Business School Case 713-418, March 2013. (Revised May 2014.)
  31. Jazzed Up: A Global Strategy Manga (Graphic Novel)

    Citation:

    Siegel, Jordan I. "Jazzed Up: A Global Strategy Manga (Graphic Novel)." Harvard Business School Case 713-514, March 2013.