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Questions and Answers
Which country is identified as a persistent investor despite shifts in political and economic environments?
Which country is identified as a persistent investor despite shifts in political and economic environments?
Which countries are classified as erratic investors prior to 1914?
Which countries are classified as erratic investors prior to 1914?
What characterizes the latecomer investors?
What characterizes the latecomer investors?
Which factor contributed to the slowdown in the growth of Japanese investments after the interwar years?
Which factor contributed to the slowdown in the growth of Japanese investments after the interwar years?
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Which of the following countries is NOT mentioned as a latecomer investor?
Which of the following countries is NOT mentioned as a latecomer investor?
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What is a common characteristic of persistent investors in the context provided?
What is a common characteristic of persistent investors in the context provided?
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Why did Japanese companies have a slower growth rate in investment during the post-bubble era?
Why did Japanese companies have a slower growth rate in investment during the post-bubble era?
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Which of the following regions experienced the earliest significant foreign direct investments (FDI) from latecomer firms?
Which of the following regions experienced the earliest significant foreign direct investments (FDI) from latecomer firms?
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By 1970, which country had a significantly higher share of the 100 largest enterprises in manufacturing net output?
By 1970, which country had a significantly higher share of the 100 largest enterprises in manufacturing net output?
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What was one advantage that British companies had in capital-raising?
What was one advantage that British companies had in capital-raising?
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Which countries had lower levels of concentration in enterprise size compared to the UK?
Which countries had lower levels of concentration in enterprise size compared to the UK?
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What factor makes analysis of home-country cultural influence on multinationals challenging?
What factor makes analysis of home-country cultural influence on multinationals challenging?
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Which countries had a strong outward-looking commercial tradition due to colonial and mercantile influences?
Which countries had a strong outward-looking commercial tradition due to colonial and mercantile influences?
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Which cultural aspect was often reflected through migration flows?
Which cultural aspect was often reflected through migration flows?
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Which two countries are noted for their multilingual abilities due to their international trade traditions?
Which two countries are noted for their multilingual abilities due to their international trade traditions?
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What language was widely understood in the United States due to immigration waves from Europe in the nineteenth century?
What language was widely understood in the United States due to immigration waves from Europe in the nineteenth century?
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What was the significance of the Treaty of Versailles?
What was the significance of the Treaty of Versailles?
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Why did Sweden and Switzerland have a high propensity to invest abroad?
Why did Sweden and Switzerland have a high propensity to invest abroad?
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What impact did World War II have on the overseas business assets of Britain?
What impact did World War II have on the overseas business assets of Britain?
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What was a significant event that affected Dutch foreign investments?
What was a significant event that affected Dutch foreign investments?
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What common trait did British and Dutch firms share despite external shocks?
What common trait did British and Dutch firms share despite external shocks?
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What caused Swedish firms to face destruction and loss of property?
What caused Swedish firms to face destruction and loss of property?
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Which of the following was NOT a factor in the decline of Dutch overseas assets?
Which of the following was NOT a factor in the decline of Dutch overseas assets?
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What reflects the strength of the international investment horizon among British and Dutch firms?
What reflects the strength of the international investment horizon among British and Dutch firms?
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What does a decline in a country's net inward investment per capita typically indicate during Stage 3?
What does a decline in a country's net inward investment per capita typically indicate during Stage 3?
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In Stage 4 of the evolutionary model, what is characteristic of a country's firms?
In Stage 4 of the evolutionary model, what is characteristic of a country's firms?
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Which sector does the evolutionary model explain patterns of multinational investment most effectively?
Which sector does the evolutionary model explain patterns of multinational investment most effectively?
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What does Porter's Diamond model emphasize as crucial for a firm's international competitiveness?
What does Porter's Diamond model emphasize as crucial for a firm's international competitiveness?
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Which of the following is NOT one of the four sets of attributes identified by Porter's Diamond model?
Which of the following is NOT one of the four sets of attributes identified by Porter's Diamond model?
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What limitations does the evolutionary model have regarding changes in investment patterns?
What limitations does the evolutionary model have regarding changes in investment patterns?
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What primarily determines the potential for local firms to benefit from agglomerations according to Porter's model?
What primarily determines the potential for local firms to benefit from agglomerations according to Porter's model?
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Which factor is associated with the domestic market that can influence competitiveness in Porter's Diamond model?
Which factor is associated with the domestic market that can influence competitiveness in Porter's Diamond model?
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What defines the investment development path model in relation to a country's economic development?
What defines the investment development path model in relation to a country's economic development?
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At which stage of the investment development path does a country experience no inward or outward foreign direct investment (FDI)?
At which stage of the investment development path does a country experience no inward or outward foreign direct investment (FDI)?
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During which stage does a country begin to attract inward foreign direct investment as its domestic markets increase?
During which stage does a country begin to attract inward foreign direct investment as its domestic markets increase?
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What occurs during the third stage of the investment development path model?
What occurs during the third stage of the investment development path model?
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What is true about a country at stage 4 of the investment development path model?
What is true about a country at stage 4 of the investment development path model?
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Which factor does NOT typically influence a country's stage in the investment development path model?
Which factor does NOT typically influence a country's stage in the investment development path model?
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Which of the following correctly describes the relationship between a developing economy and inward FDI as it reaches stage 2?
Which of the following correctly describes the relationship between a developing economy and inward FDI as it reaches stage 2?
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What is a key characteristic of stage 1 in the investment development path model?
What is a key characteristic of stage 1 in the investment development path model?
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What effect did government regulations and trade barriers have on multinational investments after 1945?
What effect did government regulations and trade barriers have on multinational investments after 1945?
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Which industry was highlighted as having grown significantly in Japan due to import controls and limitations on inward FDI?
Which industry was highlighted as having grown significantly in Japan due to import controls and limitations on inward FDI?
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What does the industrial structure of an economy influence regarding foreign direct investment (FDI)?
What does the industrial structure of an economy influence regarding foreign direct investment (FDI)?
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How did concentration levels in British industry change from the interwar years to the 1960s?
How did concentration levels in British industry change from the interwar years to the 1960s?
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Which factor is NOT mentioned as influencing the outward foreign direct investment (FDI) behavior of small economies?
Which factor is NOT mentioned as influencing the outward foreign direct investment (FDI) behavior of small economies?
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What characteristic is highlighted about small economies in relation to foreign direct investment?
What characteristic is highlighted about small economies in relation to foreign direct investment?
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What was a significant advantage of U.S. firms regarding security clearance for defense contracts?
What was a significant advantage of U.S. firms regarding security clearance for defense contracts?
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What happened to Alcoa's ownership of its Canadian affiliate, Alcan, after World War II?
What happened to Alcoa's ownership of its Canadian affiliate, Alcan, after World War II?
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Study Notes
Chapter 9: Multinationals and Home Economies
- This chapter explores the relationship between multinational corporations and their home economies.
- The organization of knowledge within firms is shaped by the interplay of national institutions and entrepreneurship.
- Different countries' firms develop unique capabilities and organizational structures, reflected in their strategies and organization.
- The chapter examines long-term investment differences between firms of different nationalities, including geographical and sectoral distribution of their investments.
- It also explores the impact multinationals have on their home economies.
- The role of nationality in international business is discussed.
9.1 Multinationals and Nations
- This chapter explores the relationship between multinationals and their home economies.
- The organization of knowledge by firms is shaped by the interplay of national institutions and entrepreneurship.
- Firms from different countries develop unique capabilities and organizational structures, reflected in their strategies and organization.
- This chapter investigates the long-term disparities between firms of different nationalities in their investment proclivities and the geographic and sectoral distribution of their investments.
- The chapter analyzes the impact of multinationals on their home economies.
- The chapter concludes by discussing whether nationality still matters in international business.
9.2 Home Economies Over Time
9.2.1 The Geographical Distribution of Multinationals
- The ownership pattern of multinational corporations reflects significant national differences in the timing of international business activities.
- Three categories of home economies can be identified:
- Persistent investors (e.g., United States, Britain, Netherlands)
- Erratic investors (e.g., France, Germany, Japan)
- Latecomer investors (e.g., Italy, Singapore, Brazil, Hong Kong, Taiwan)
- Persistent investors began investing in the 19th century and continued extensively despite economic and political shifts.
- The United States became a prominent persistent investor.
- British companies consistently invested abroad, even during periods of economic decline.
- Erratic investors (e.g., France, Germany, and Japan) exhibited investment activities prior to World War I.
- Japan's late industrialization and low initial incomes marked them as an erratic investor category.
- Latecomer investors (e.g., Southern European countries, and Asian and Latin American countries) began outward FDI in the 1960s and expanded rapidly in the 1980s.
4. Wars and Chance
- The low level of German and Japanese FDI from World War I to the 1970s resulted from the sequestration of their foreign assets.
- The Treaty of Versailles had significant implications for Germany and other countries involved in World War I.
- Neutral status during World Wars I and II for certain countries (e.g., Sweden, Switzerland, and the Netherlands) resulted in intact foreign assets.
5. Firm, Nations, and Firms
- Home country characteristics offer limited explanations for the dynamics of multinational corporations.
- Firms of the same nationality do not always share the same resources and capabilities.
- Significant performance differences exist among firms within the same country.
- The success of Japanese automobile companies (Toyota, Honda, and Nissan) in the late 20th century varied, demonstrating that firm-specific factors also play a significant role.
2. Porter Diamond Model of International Competitive Advantage
- Four attributes of a home economy are critical for the competitiveness of its firms: natural resources, demand levels and composition, firm strategy, structure, and rivalry.
- The level and composition of natural and created resources in a country.
- The country's demand for goods and services.
- The effectiveness of firm agglomerations and external economies in that country.
- Firm strategy, structure, and rivalry levels.
3. The Role of Culture
- Strong national cultural values influence firm organization and managerial behavior.
- Analysis of home country cultural influence on multinationals remains complex.
- Outward-oriented cultural orientations are found in cultures with long traditions of international trade and exposure to diverse foreign cultures.
- Inward-oriented cultures developed from a long history of national seclusion with a sense of their own cultural distinctiveness
- The particular prominent role of English-speaking countries as sources of FDI in natural resources correlates with their cultural tendencies.
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Description
This quiz delves into Chapter 9, which analyzes the interaction between multinational corporations and their home economies. It highlights how national institutions and entrepreneurship influence knowledge organization within firms. Additionally, it examines differences in long-term investments and the overall impact of multinationals on their national economies.
