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On the growth of foreign affiliates: multinational plant networks, joint ventures, and flexibility

Author

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  • René Belderbos

    ([1] Department of Managerial Economics, Strategy and Innovation, Katholieke Universiteit Leuven, Belgium [2] Department of Technology Management, Technische Universiteit Eindhoven, The Netherlands)

  • Jianglei Zou

    (Fortis Bank NV, Brussels, Belgium)

Abstract

We take a flexibility perspective to analyse employment growth in a large sample of Japanese manufacturing affiliates in nine Asian countries during the years leading up to and into the Asian financial crisis (1995–1999). We find that joint ventures are less flexible than wholly owned affiliates in responding to changing environmental conditions in the focal country, and underperform in high-growth environments. Multinational enterprises (MNEs) use the flexibility created by their multinational plant network to adjust affiliate employment in response to labour cost changes in other countries in which they operate plants. However, no evidence was found that the presence of joint ventures in multinational plant networks reduces this network flexibility. Our findings suggest that more research is needed on the heterogeneous responses of MNEs and their affiliates to changing economic environments. Journal of International Business Studies (2007) 38, 1095–1112. doi:10.1057/palgrave.jibs.8400319

Suggested Citation

  • René Belderbos & Jianglei Zou, 2007. "On the growth of foreign affiliates: multinational plant networks, joint ventures, and flexibility," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(7), pages 1095-1112, December.
  • Handle: RePEc:pal:jintbs:v:38:y:2007:i:7:p:1095-1112
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    Citations

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    Cited by:

    1. Harald Oberhofer & Michael Pfaffermayr, 2013. "Firm growth in multinational corporate groups," Empirical Economics, Springer, vol. 44(3), pages 1435-1453, June.
    2. repec:spr:manint:v:57:y:2017:i:6:d:10.1007_s11575-017-0322-2 is not listed on IDEAS
    3. Harald Oberhofer, 2012. "Firm Growth, European Industry Dynamics and Domestic Business Cycles," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(3), pages 316-337, July.
    4. repec:spr:manint:v:54:y:2014:i:1:d:10.1007_s11575-013-0198-8 is not listed on IDEAS
    5. Varum, Celeste & Rocha, Vera Catarina & Valente da Silva, Hélder, 2014. "Economic slowdowns, hazard rates and foreign ownership," International Business Review, Elsevier, vol. 23(4), pages 761-773.
    6. repec:spr:manint:v:53:y:2013:i:4:d:10.1007_s11575-012-0157-9 is not listed on IDEAS
    7. H. Young Baek & David Cho & Dong-Kyoon Kim, 2012. "Multinational Real Options and Hysteresis: An Examination of FDI in Manufacturing and Hard- and Soft-Service Industries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(0), pages 7-19, January.
    8. H. Young Baek & David Cho & Dong-Kyoon Kim, 2012. "Multinational Real Options and Hysteresis: An Examination of FDI in Manufacturing and Hard- and Soft-Service Industries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(0), pages 7-19, January.
    9. René Belderbos & Kyoji Fukao & Keiko Ito & Wilko Letterie, 2013. "Global Fixed Capital Investment by Multinational Firms," Economica, London School of Economics and Political Science, vol. 80(318), pages 274-299, April.
    10. Ramos, Miguel A. & Ashby, Nathan J., 2013. "Heterogeneous firm response to organized crime: Evidence from FDI in Mexico," Journal of International Management, Elsevier, vol. 19(2), pages 176-194.
    11. Marie-Ann Betschinger, 2015. "Do banks matter for the risk of a firm's investment portfolio? Evidence from foreign direct investment programs," Strategic Management Journal, Wiley Blackwell, vol. 36(8), pages 1264-1276, August.
    12. Varum, Celeste Amorim & Rocha, Vera Catarina Barros, 2011. "Do foreign and domestic firms behave any different during economic slowdowns?," International Business Review, Elsevier, vol. 20(1), pages 48-59, February.
    13. repec:pal:jintbs:v:48:y:2017:i:5:d:10.1057_s41267-016-0055-7 is not listed on IDEAS
    14. Sangcheol Song, 2017. "Ownership Increase in International Joint Ventures: The Within- and Across-Country Flexibility Perspective," Management International Review, Springer, vol. 57(1), pages 93-120, February.
    15. Fisch, Jan Hendrik & Zschoche, Miriam, 2011. "Do firms benefit from multinationality through production shifting?," Journal of International Management, Elsevier, vol. 17(2), pages 143-149, June.

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