Jordan I. Siegel
Associate Professor of Business Administration
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, the Journal of International Business Studies, and the Journal of Economic Literature.
Multinational Firms, Labor Market Discrimination, and the Capture of Competitive Advantage by Exploiting the Social Divide
The organizational theory of the multinational firms 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 multi-year competitive opportunity for multinationals.
Keywords: multinational firm;
labor market discrimination;
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 exploit this legal surprise as a natural experiment to test the legal bonding hypothesis—namely, to assess firms’ ability to use other countries’ enforcement institutions as institutional substitutes and, more broadly, to assess the value of the U.S. legal enforcement mechanism. This event nonetheless was met with indifferent or positive, but not negative, reactions. Among other things, we find insignificant or positive abnormal returns using Brown-Warner, matched samples, and portfolio analyses, a reduction in the price premium for U.S.-traded equities, and little change in bid-ask spreads or the proportion of U.S.trading volume. These results challenge the view of at least the U.S.civil liability regime, as currently designed, as a source of value for such firms and warrant closer examination of the operation of formal enforcement institutions.