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Globalization

Globalization

    • December 2014
    • Article

    Market Competition, Earnings Management, and Persistence in Accounting Profitability Around the World

    By: Paul M. Healy, George Serafeim, Suraj Srinivasan and Gwen Yu

    We examine how cross-country differences in product, capital, and labor market competition, and earnings management affect mean reversion in accounting return on assets. Using a sample of 48,465 unique firms from 49 countries, we find that accounting returns mean revert faster in countries where there is more product and capital market competition, as predicted by economic theory. Country differences in labor market competition and earnings management are also related to mean reversion in accounting returns—but the relation varies with firm performance. Country labor competition increases mean reversion when unexpected returns are positive, but dampens it when unexpected returns are negative. Accounting returns in countries with higher earnings management mean revert more slowly for profitable firms and more rapidly for loss firms. Thus, earnings management incentives to slow or speed up mean reversion in accounting returns are accentuated in countries where there is a high propensity for earnings management. Overall, these findings suggest that country factors explain mean reversion in accounting returns and are therefore relevant for firm valuation.

    • December 2014
    • Article

    Market Competition, Earnings Management, and Persistence in Accounting Profitability Around the World

    By: Paul M. Healy, George Serafeim, Suraj Srinivasan and Gwen Yu

    We examine how cross-country differences in product, capital, and labor market competition, and earnings management affect mean reversion in accounting return on assets. Using a sample of 48,465 unique firms from 49 countries, we find that accounting returns mean revert faster in countries where there is more product and capital market...

    • Article

    Spanning the Institutional Abyss: The Intergovernmental Network and the Governance of Foreign Direct Investment

    By: Juan Alcacer and Paul Ingram

    Global economic transactions such as foreign direct investment must extend over an institutional abyss between the jurisdiction, and therefore protection, of the states involved. Intergovernmental organizations (IGOs), whose members are states, represent an important attempt to span this abyss. IGOs are mandated variously to smooth economic transactions, facilitate global cooperation, and promote cultural contact and awareness. We use a network approach to demonstrate that the connections between two countries through joint-membership in the same IGOs are associated with a large positive influence on the foreign direct investment that flows between them. Moreover, we show that this effect occurs not only in the case of IGOs that focus on economic issues, but also on those with social and cultural mandates. This demonstrates that relational governance is important and feasible in the global context and for the most risky transactions. Finally we examine the interdependence between the IGO network and the domestic institutions of states. The interdependence between these global and domestic institutional forms is complex, with target-country democracy being a substitute for economic IGOs, but a complement for social and cultural IGOs.

    • Article

    Spanning the Institutional Abyss: The Intergovernmental Network and the Governance of Foreign Direct Investment

    By: Juan Alcacer and Paul Ingram

    Global economic transactions such as foreign direct investment must extend over an institutional abyss between the jurisdiction, and therefore protection, of the states involved. Intergovernmental organizations (IGOs), whose members are states, represent an important attempt to span this abyss. IGOs are mandated variously to smooth economic...

    • July 2013
    • Article

    Ethnic Innovation and U.S. Multinational Firm Activity

    By: C. Fritz Foley and William R. Kerr

    This paper studies the impact that immigrant innovators have on the global activities of U.S. firms by analyzing detailed data on patent applications and on the operations of the foreign affiliates of U.S. multinational firms. The results indicate that increases in the share of a firm's innovation performed by inventors of a particular ethnicity are associated with increases in the share of that firm's affiliate activity in their native countries. Ethnic innovators also appear to facilitate the disintegration of innovative activity across borders and to allow U.S. multinationals to form new affiliates abroad without the support of local joint venture partners. Thus, this paper points out that immigration can enhance the competitiveness of multinational firms.

    • July 2013
    • Article

    Ethnic Innovation and U.S. Multinational Firm Activity

    By: C. Fritz Foley and William R. Kerr

    This paper studies the impact that immigrant innovators have on the global activities of U.S. firms by analyzing detailed data on patent applications and on the operations of the foreign affiliates of U.S. multinational firms. The results indicate that increases in the share of a firm's innovation performed by inventors of a particular ethnicity...

    • 2013
    • Chapter

    Multinational Enterprises and Incomplete Institutions: The Demandingness of Minimum Moral Standards

    By: Nien-he Hsieh

    Multinational enterprises (MNEs) operate across countries that vary widely in their legal, political, and regulatory institutions. One question that arises is whether there are certain minimum standards that ought to guide managers in their decision making independently of local institutional requirements, especially when institutional arrangements are incomplete. This chapter examines what follows if managers recognize two kinds of duties of forbearance in their decision making that are commonly held to be among the most minimal of moral duties: the duty not to harm and the duty not to violate the liberty of others. The chapter concludes that the standards for MNEs may be more demanding than what the minimalist nature of duties of forbearance initially would suggest.

    • 2013
    • Chapter

    Multinational Enterprises and Incomplete Institutions: The Demandingness of Minimum Moral Standards

    By: Nien-he Hsieh

    Multinational enterprises (MNEs) operate across countries that vary widely in their legal, political, and regulatory institutions. One question that arises is whether there are certain minimum standards that ought to guide managers in their decision making independently of local institutional requirements, especially when institutional...

    • 2014
    • Working Paper

    Finance and Social Responsibility in the Informal Economy: Institutional Voids, Globalization and Microfinance Institutions

    By: Hao Liang, Christopher Marquis and Sunny Li Sun

    We examine the heterogeneous effects of globalization on the interest rate setting by microfinance institutions (MFIs) around the world. We consider MFIs as a mechanism to overcome the institutional void of credit for small entrepreneurs in developing and emerging economies. Using a large global panel of MFIs from 119 countries, we find that social globalization that embraces egalitarian institutions on average reduces MFIs' interest rates. In contrast, economic globalization that embraces neoliberal institutions on average increases MFIs' interest rates. Moreover, the proportions of female borrowers and of poorer borrowers negatively moderate the relationship between social globalization and MFI interest rate, and positively moderate the relationship between economic globalization and MFI interest rate. This paper contributes to understanding how globalization processes can both ameliorate and exacerbate challenges of institutional voids in emerging and developing economies.

    • 2014
    • Working Paper

    Finance and Social Responsibility in the Informal Economy: Institutional Voids, Globalization and Microfinance Institutions

    By: Hao Liang, Christopher Marquis and Sunny Li Sun

    We examine the heterogeneous effects of globalization on the interest rate setting by microfinance institutions (MFIs) around the world. We consider MFIs as a mechanism to overcome the institutional void of credit for small entrepreneurs in developing and emerging economies. Using a large global panel of MFIs from 119 countries, we find that...

Global Initiative

The Global Initiative builds on a legacy of global engagement by supporting faculty, students, and alumni in their work, and encouraging a global outlook in research, study, and practice.
Global
Research Centers

The globalization of business has long encouraged Harvard Business School (HBS) faculty to research international business practices and the effects of globalization. Seminal contributions - Christopher Bartlett on managing across borders, Michael Porter on competition in global industries, and Louis Wells on foreign investment in emerging markets - helped pave today’s global research path. Supported by eight Global Research Centers that facilitate our contact with global companies and the collection of international data, key investigations concentrate on the effectiveness of management practices in global organizations; cross-cultural learning and adaptation processes; the challenges of taking companies global; emerging-market companies with global potential; and international political economy and its impact on economic development.

Global Initiative

The Global Initiative builds on a legacy of global engagement by supporting faculty, students, and alumni in their work, and encouraging a global outlook in research, study, and practice.

Global
Research Centers

Recent Publications

Velong: Rethinking 'Made in China'

By: Krishna G. Palepu, Nancy Hua Dai and Billy Chan
  • January 2023 |
  • Case |
  • Faculty Research
Velong is a supplier of kitchen equipment and backyard grills for major global brands and store brands of large western retailers. In light of the Covid-related disruptions to the global supply chains, and the evolving trade tensions between China and the Western countries, Velong’s global customers were pressuring the company to move 30% of its manufacturing from China to other locations. Velong was considering a number of countries to shift its manufacturing – India, Vietnam, Trukey and Mexico. At present, none of these countries seem to be able to match the cost structure and manufacturing quality that the company is able to achieve in China. Velongs c0-founders, Jacob Rothman and Iven Chen, need to decide soon how to forumlate a strategy to deal with the challenge.
Keywords: Globalization; Supply Chain Management; Risk Management; Manufacturing Industry; China; India; Mexico; Turkey; Viet Nam
Citation
Educators
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Palepu, Krishna G., Nancy Hua Dai, and Billy Chan. "Velong: Rethinking 'Made in China'." Harvard Business School Case 323-064, January 2023.

The END Fund: To Eliminate Neglected Tropical Diseases

By: V. Kasturi Rangan and Courtney Han
  • January 2023 |
  • Case |
  • Faculty Research
Founded in 2012, the END fund focused on eliminating five Neglected Tropical Diseases that accounted for 80% of the tropical diseases affecting nearly 1.5 billion people worldwide. Its roughly $25 million/year annual budget was fully committed when it got news that the British Government would be cutting back its funding for the sector, putting at risk nearly 50,000 people for a tropical disease (visceral leishmaniasis-VL), which the End Fund was currently not addressing. The case question is whether the End Fund should redirect its resources to VL. The case highlights the difficult decisions that noprofits have to make balancing resource stretch and mission focus.
Keywords: Nonprofit Organizations; Health Disorders; Health Care and Treatment; Resource Allocation; Global Range; Decisions; Investment Funds
Citation
Educators
Related
Rangan, V. Kasturi, and Courtney Han. "The END Fund: To Eliminate Neglected Tropical Diseases." Harvard Business School Case 523-063, January 2023.

Marfrig's Quest for Greener Beef

By: Jose B. Alvarez, Pedro Levindo and Ruth Costas
  • December 2022 (Revised January 2023) |
  • Case |
  • Faculty Research
Marfrig, one of the world’s leading meatpackers, strived to comply with its commitment to have a deforestation-free value chain in Brazil by 2030. The company also pledged to reduce its emissions of greenhouse gases in accordance with the guidelines set by the Science-Based Targets Imitative (SBTi). Controlling shareholder and chairman Marcos Molina, and Director of Sustainability and Communications for South America Paulo Painez, must figure how to achieve these goals while dealing with increased pressures from NGOs, customers, and foreign governments. The pair believed that a solution to the company’s—and the sector’s—challenges would only be achieved by working together with other stakeholders of the Brazilian beef industry: cattle ranchers, NGOs, the government, and civil society at large. Aligning the interests of the different players, while keeping Brazil’s lead as the world’s top beef exporter, was especially challenging given the country’s fraught political environment and its tarnished image abroad.
Keywords: Agribusiness; Animal-Based Agribusiness; Plant-Based Agribusiness; Acquisition; Family Business; Communication Strategy; Environmental Management; Climate Change; Environmental Regulation; Environmental Sustainability; Bonds; Food; Global Strategy; Goods and Commodities; Government and Politics; Political Elections; Leading Change; Marketing; Product Marketing; Product Positioning; Supply Chain; Supply Chain Management; Corporate Social Responsibility and Impact; Business and Government Relations; Business and Stakeholder Relations; Partners and Partnerships; Strategy; Adaptation; Business Strategy; Commercialization; Competitive Strategy; Corporate Strategy; Diversification; Expansion; Agriculture and Agribusiness Industry; Food and Beverage Industry; Brazil; Latin America; Argentina; Uruguay; North America; United States; Europe; Asia; China
Citation
Educators
Related
Alvarez, Jose B., Pedro Levindo, and Ruth Costas. "Marfrig's Quest for Greener Beef." Harvard Business School Case 523-073, December 2022. (Revised January 2023.)

The New China Shock: How Beijing’s Party-State Capitalism Is Changing the Global Economy

By: Margaret M. Pearson, Meg Rithmire and Kellee S. Tsai
  • December 8, 2022 |
  • Article |
  • ForeignAffairs.com
In the wake of the global financial crisis of 2008, China began to move away from the market-based approach that had shaped its economic policies for three decades, and toward something that might be termed “party-state capitalism,” which involves a high degree of Chinese Communist Part (CCP) control over strategic sectors of the economy. This has led to significant changes in the U.S.-Chinese economic relationship, as both sides have made efforts to secure supply chains, screen inward and outward capital flows, diminish the power of global firms, and reorganize alliances to protect against economic coercion. The effects of this dynamic go well beyond the U.S.-Chinese relationship: the economic arms race between Washington and Beijing has changed the shape of global capitalism.
Keywords: International Relations; Globalized Economies and Regions; Economic Systems; Trade; China
Citation
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Pearson, Margaret M., Meg Rithmire, and Kellee S. Tsai. "The New China Shock: How Beijing’s Party-State Capitalism Is Changing the Global Economy." ForeignAffairs.com (December 8, 2022).

Freelancer, Ltd.

By: Christopher Stanton, Karim R. Lakhani, Jin Hyun Paik and Nina Cohodes
  • December 2022 |
  • Case |
  • Faculty Research
Over the course of the 2010s, the rapid advancement of mobile technologies and the rise of online freelancing platforms seemed to portend a radical transformation of labor markets into on-demand, flexible talent pools. Even though several Fortune 500 companies-including Microsoft, Samsung, and General Electric-embraced digital labor solutions, enterprise adoption lagged far behind smaller businesses and startups. Despite the promising potential benefits, concerns persisted about navigating labor regulations, ensuring appropriate vetting, and guaranteeing the quality of work. Sarah Tang, the newly appointed Vice President of Enterprise at Freelancer, Ltd., took on the challenge of crafting the growth strategy, operations, and sales of Freelancer's services to Fortune 500 companies. What it would take to convince more enterprises of the potential of on-demand freelance labor that could help them hire skilled freelancers in volume or in multiple countries simultaneously? What did the future hold for open work practices between enterprises and digital labor markets?
Keywords: Freelancers; Labor Markets; Internet and the Web; Digital Platforms; Corporate Entrepreneurship; Human Capital; Change Management; Globalized Firms and Management; Employment; Global Range; Employment Industry
Citation
Educators
Related
Stanton, Christopher, Karim R. Lakhani, Jin Hyun Paik, and Nina Cohodes. "Freelancer, Ltd." Harvard Business School Multimedia/Video Case 823-706, December 2022.

Chêne Bleu: Caught in the Trade Tariff Crossfire

By: Dante Roscini, Elena Corsi and Daniela Beyersdorfer
  • November 2022 |
  • Case |
  • Faculty Research
A French wine estate faced a 25% tariff on its U.S. exports following a multi-decade-long EU-U.S. trade dispute in the aerospace industry.
Keywords: Trade; Globalized Markets and Industries; Business Startups; Business Strategy; Expansion; Family Business; Distribution; Agribusiness; Taxation; Agriculture and Agribusiness Industry; Food and Beverage Industry; Aerospace Industry; France; United States; Europe
Citation
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Roscini, Dante, Elena Corsi, and Daniela Beyersdorfer. "Chêne Bleu: Caught in the Trade Tariff Crossfire." Harvard Business School Case 723-020, November 2022.

The Globalization of Manchester City Football Group

By: Maria P. Roche, Tiona Zuzul, Exequiel Hernandez and Amy Klopfenstein
  • November 2022 |
  • Case |
  • Faculty Research
This case describes the efforts of City Football Group (CFG) to purchase Esporte Clube Bahia (Bahia), a Brazilian professional soccer club. CFG’s strategy was to acquire under-performing clubs worldwide, invest money in high-profile players, and improve the teams’ performances. The company also aimed to develop young players on its lower-tier teams and then funnel them to Manchester City, its highest-performing team, once they matured. CFG instructed the teams to follow a similar style of play and, in some cases, changed teams’ jerseys and names to conform to CFG’s brand. Purchasing Bahia presented the opportunity to gain a foothold in Brazilian soccer, an under-monetized market poised for rapid growth. Yet Bahia was a mid-tier team with no star players. It was also unclear whether Bahia’s fans and players would meld with CFG’s culture and expectations. At the conclusion of the case, CFG CEO Ferran Soriano discovers that the price for Bahia is significantly higher than reports had initially indicated. Is the club worth the price?
Keywords: Business Ventures; Acquisition; Business Conglomerates; Geography; Geographic Location; Geographic Scope; Globalization; Global Strategy; Globalized Markets and Industries; Markets; Demand and Consumers; Marketing; Brands and Branding; Organizations; Organizational Change and Adaptation; Sports; Strategy; Competition; Competitive Advantage; Diversification; Expansion; Sports Industry; Europe; United Kingdom; England; South America; Brazil
Citation
Educators
Related
Roche, Maria P., Tiona Zuzul, Exequiel Hernandez, and Amy Klopfenstein. "The Globalization of Manchester City Football Group." Harvard Business School Case 723-391, November 2022.

Arcos Dorados’ Quest for the Digitalization of Last-Mile Delivery in Colombia

By: Jorge Tamayo, Jenyfeer Martinez Buitrago and Mariana Cal
  • November 2022 |
  • Case |
  • Faculty Research
In 2018, Francisco Staton, Managing Director of Arcos Dorados in Colombia had to decide on the company’s strategy to expand its food ordering and delivery business in the country. Arcos Dorados stood as McDonald’s largest independent franchisee, and Colombia was one of the 20 markets and territories in Latin America and the Caribbean where the company operated. Arcos Dorados had analyzed the conditions under which the company would offer delivery services at its restaurants, following the announcement of an agreement entered into by McDonald’s corporation for offering delivery globally through a last-mile delivery company. As there were local limitations not addressed by the global agreement, Arcos Dorados’ Colombia management team were considering two potential alternatives that could help to address them. The first alternative hinged on stepping up the company’s efforts to consolidate its own delivery service. With the second alternative, the company would pursue partnering with last-mile delivery platforms under more favorable conditions than the ones agreed upon by the global agreement. What would be the best alternative to move forward?
Keywords: Digital Transformation; Delivery; McDonald's; Latin America; Quick Serve Restaurants; QSR; Transformation; Decision Making; Decision Choices and Conditions; Global Strategy; Technological Innovation; Growth and Development Strategy; Agreements and Arrangements; Negotiation Tactics; Logistics; Service Delivery; Organizational Culture; Performance Improvement; Partners and Partnerships; Strategy; Food and Beverage Industry; Latin America; South America; Colombia
Citation
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Tamayo, Jorge, Jenyfeer Martinez Buitrago, and Mariana Cal. "Arcos Dorados’ Quest for the Digitalization of Last-Mile Delivery in Colombia." Harvard Business School Case 723-395, November 2022.

Role of Context in Knowledge Flows: Host Country versus Headquarters as Sources of MNC Subsidiary Knowledge Inheritance

By: Mike Horia Teodorescu, Prithwiraj Choudhury and Tarun Khanna
  • November, 2022 |
  • Article |
  • Global Strategy Journal
We respond to calls in the strategy and international business literature for elucidating how multinational subsidiaries develop contextual intelligence in host countries and how they use the local context as a source of valuable opportunities for learning. Applying the theoretical lens of subsidiary absorptive capacity and building on a gravity model, we propose an approach that can distinguish and compare the influences of the host country context and headquarters over the subsidiary knowledge production. Some subsidiaries may become global second headquarters and innovation hubs, as evidenced qualitatively in the paper with the case of Cisco. Essentially, subsidiaries, characterized by higher stocks of knowledge and greater number of locally hired employees are likely to absorb relatively more knowledge from the local host country context.
Keywords: MNCs; Knowledge Flows; Innovation; Gravity Model; Absorptive Capacity; Multinational Firms and Management; Business Subsidiaries; Knowledge Management; Business Headquarters; Innovation and Invention
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Teodorescu, Mike Horia, Prithwiraj Choudhury, and Tarun Khanna. "Role of Context in Knowledge Flows: Host Country versus Headquarters as Sources of MNC Subsidiary Knowledge Inheritance." Special Issue on Decade Celebration Special Issue II. Global Strategy Journal 12, no. 4 (November, 2022): 658–678.

mPharma: Scaling Access to Affordable Primary Care in Africa

By: Regina E. Herzlinger and Ben Creo
  • October 2022 |
  • Case |
  • Faculty Research
mPharma CEO Greg Rockson is attempting to create the largest pan-African primary healthcare company. He must evaluate a three-year strategy potentially involving three key components: a rapid and extensive expansion of the company's network of 600 retail pharmacies in nine African countries, the future of a recently launched telehealth program, and the creation of a new customer payment plan that will cover the cost of the common prescription drugs that are used for prevalent communicable diseases, such as malaria. Rockson must balance his desire to promote health equity with ensuring that mPharma becomes a profitable company.
This case is suitable both as a general business case for MBA students of any level and as a case for courses focused on the healthcare industry, the pharmaceutical value chain, health care systems in Africa, innovation in health care, social entrepreneurship, and African businesses.
Keywords: Africa; Pharmaceutical Companies; Pharmacy Benefit Manager; Health Care; Health Care And Treatment; Health Care Costs; Health Care Delivery; Health Care Entrepreneurship; Telehealth; Health Equity; Corporate Strategy; Social Entrepreneurship; Equity; Growth and Development Strategy; Expansion; Product Launch; Customer Value and Value Chain; Social Enterprise; Multinational Firms and Management; Pharmaceutical Industry; Health Industry; Africa
Citation
Educators
Related
Herzlinger, Regina E., and Ben Creo. "mPharma: Scaling Access to Affordable Primary Care in Africa." Harvard Business School Case 323-033, October 2022.
More Publications

Faculty

Geoffrey G. Jones
Christopher A. Bartlett
Tarun Khanna
John A. Quelch
Lynn S. Paine
Ray A. Goldberg
Louis T. Wells
Rosabeth M. Kanter
Michael Y. Yoshino
Michael E. Porter
Laura Alfaro
Krishna G. Palepu
→See All

HBS Working Knowlege

    • 17 Aug 2020

    Of Learning and Forgetting: Centrism, Populism, and the Legitimacy Crisis of Globalization

    Re: Rawi E. Abdelal
    • 23 Jun 2020

    Dignity, Inequality, and the Populist Backlash: Lessons from America and Europe for a Sustainable Globalization

    Re: Rawi E. Abdelal
    • 16 Apr 2020

    Has COVID-19 Broken the Global Value Chain?

    Re: Laura Alfaro
→More Articles

Harvard Business Publishing

    • January–February 2013
    • Article

    When the Crowd Fights Corruption

    By: Paul M. Healy and Karthik Ramanna
    • November 2022
    • Case

    Chêne Bleu: Caught in the Trade Tariff Crossfire

    By: Dante Roscini, Elena Corsi and Daniela Beyersdorfer
→More Harvard Business Publishing
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