Transnational Corporations - Volume 30, Issue 2, 2023

Multinational enterprises in emerging markets (EMNEs), owing to weak enforcement of intellectual property rights (IPR), face challenges when undertaking domestic innovation. As a result, they may search for superior IPR environments in which to create greenfield projects focused on research and development (R&D) and innovation. We hypothesize that the likelihood that an EMNE chooses to invest in an R&D-focused greenfield project over other FDI projects is positively associated with increased levels of host-country patent enforcement protection relative to its home market. In addition, we hypothesize that EMNEs, many in the process of catching up through “springboard” FDI with developed-market MNEs (DMNEs), are more sensitive to IPR protection than DMNEs. Results of logistic regression modelling of 112,908 greenfield projects largely support our hypotheses. We discuss implications for understanding EMNE theorizing and policy, which has to date focused more on regulating technology-seeking mergers and acquisitions (M&As), overlooking the growing importance of R&D-related greenfield FDI as an effective firm-level catch-up strategy for EMNEs.

This paper discusses the concepts of reshoring and nearshoring, which are gaining increasing popularity. We contribute to the literature in three main ways. First, building on previous theories we define a conceptual framework and consider how recent developments – the COVID-19 pandemic and Industry 4.0 technologies – may affect these patterns. Second, we process some preliminary evidence to test whether Latin American and Caribbean economies are indeed participating in this reshoring trend. Third, we propose a measure of “reshoring readiness”, to assess whether these countries appear to be ready to host relocations and benefit from them. Overall, we find limited evidence of nearshoring to the region so far, except in Mexico, and we highlight strengths and weaknesses of the region for attracting and benefitting from future relocations.

This study examines the effect of regulatory outreach actions on modern slavery statements by the United Kingdom. More than 30,000 policy entries in the United Kingdom Modern Slavery Compliance Registry from 2020 to 2022 were reviewed using analysis of variance and multiple regression to determine predictors of policy statement robustness. The results reveal that policies have become more robust following regulatory efforts. Private conglomerate groups, which can include multinational corporations, are the largest publishers to the registry. However, the role of the chief executive officer as the authority approving the statements has diminished in impact, while company turnover has emerged as a more reliable predictor of impact. Furthermore, the presence of International Labour Organization indicators in the policy statement shows that concern for child-related issues can vary depending on the geographical focus of risk, but that it does not predict a focus on women. The steady improvement in the robustness of modern slavery policies signals some progress following regulator outreach.

This study examines two potentially opposing effects that the current state of trade globalization can have on foreign governmental lobbies in the United States. On one hand, economic globalization and increased flows of goods may lead to more and more contentious issues between trading partners. On the other hand, the growing networks of global value chains (GVCs) may mobilize interest groups in foreign lobbies’ target countries (the United States in this study), whose activities might substitute for those of foreign governmental lobbies. With such linkages, an increase in lobbying activities by domestic producers may reduce the need for direct foreign lobbying on contentious issues. The study reveals different effects of forward and backward GVC linkages, and the results have two main policy implications: first, policymakers should be aware of the growing intricate nature of foreign influence; second, more attention must be paid to political consequences of GVCs’ distributive effects, particularly those from backward linkages.

This study aims to assess the pattern and prevalence of intrafirm activities in foreign exchange transactions of foreign affiliates in the manufacturing sector in India. The related-party foreign transactions of selected foreign affiliates are analysed for two years, and the shares of financial payments directed to tax haven locations are identified to appraise the vulnerability of these outflow transactions to potential risk of corporate tax avoidance. A majority of foreign exchange earnings and expense transactions were found to be conducted within firms. The major part of intrafirm payments for the key expenditure types was made to various tax haven locations having different levels of tax avoidance risk. Close to half of all expense payments were traced to tax havens, with several firms reporting predominant shares of intrafirm import, financial or services payments linked to certain significant tax havens. The data indicate active involvement of foreign affiliates in India in the use of tax havens for foreign expense transfers, which could be motivated by tax avoidance aims. This tendency is noted to be high for specific channels such as services, interest payments and other miscellaneous transactions, suggesting that these channels may be used for transfer mispricing and tax avoidance strategies by foreign-affiliated firms.

The contributions of small and medium-sized enterprises (SMEs) to domestic economies are sizeable. The most productive and dynamic ones venture abroad and internationalize by exporting or by investing overseas. For smaller firms, foreign direct investment (FDI) implies the commitment of a high level of resources, potentially increasing the risk of failure. This study empirically assesses the question of whether outward investment is a valuable growth strategy or whether engaging in FDI might hurt performance. The results show that while displaying higher revenue growth rates than their larger counterparts, SMEs experience a bigger shock after their foreign investment: the sales growth of SMEs decreases by about 6 per cent during the first three years after a cross-border greenfield project; it starts recovering only after the fourth year. Larger MNEs show no significant change in growth rate after an investment. The decrease in revenues in SMEs occurs mostly in manufacturing enterprises, and less so in services companies. This is primarily because for services companies a foreign affiliate, which almost by definition is market-seeking, tends to make an immediate contribution to sales and sales growth, whereas many manufacturing affiliates require a start-up period and may engage in activities that contribute less to sales growth, such as supply chain activities.