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Questions and Answers
What does the performance divergence among firms from the same home country indicate?
What does the performance divergence among firms from the same home country indicate?
Which firm performed poorly compared to its competitors in the Japanese automobile industry?
Which firm performed poorly compared to its competitors in the Japanese automobile industry?
What is one reason for the success of multinational firms like Shell and Exxon?
What is one reason for the success of multinational firms like Shell and Exxon?
What characteristic allows some firms to remain prominent in their industry despite a loss of home country advantage?
What characteristic allows some firms to remain prominent in their industry despite a loss of home country advantage?
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Which factor is NOT mentioned as influencing the growth of global firms?
Which factor is NOT mentioned as influencing the growth of global firms?
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How did the Japanese automobile industry in the 1980s and 1990s demonstrate diversity?
How did the Japanese automobile industry in the 1980s and 1990s demonstrate diversity?
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What does the history of successful multinational firms illustrate about their strategies?
What does the history of successful multinational firms illustrate about their strategies?
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What is a primary example of a firm's strategic advantage mentioned in the content?
What is a primary example of a firm's strategic advantage mentioned in the content?
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What is the relationship between a country's economic development and its level of international investment?
What is the relationship between a country's economic development and its level of international investment?
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During which stage of the investment development path model does a country begin to attract inward foreign direct investment (FDI)?
During which stage of the investment development path model does a country begin to attract inward foreign direct investment (FDI)?
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What occurs in Stage 1 of the investment development path model?
What occurs in Stage 1 of the investment development path model?
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What does Stage 3 of the investment development path model signify for a country's net inward investment per capita?
What does Stage 3 of the investment development path model signify for a country's net inward investment per capita?
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Which factor most directly influences the stage of a country’s economic development?
Which factor most directly influences the stage of a country’s economic development?
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What characterizes a country's economy at Stage 4 of the investment development path model?
What characterizes a country's economy at Stage 4 of the investment development path model?
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Which stage of the investment development path model indicates that a country has reached significant industrialization?
Which stage of the investment development path model indicates that a country has reached significant industrialization?
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What is a common outcome for countries in Stage 3 of the investment development path model?
What is a common outcome for countries in Stage 3 of the investment development path model?
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What event did the Treaty of Versailles officially conclude?
What event did the Treaty of Versailles officially conclude?
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How did the neutral status of Sweden and Switzerland during the world wars influence their investments?
How did the neutral status of Sweden and Switzerland during the world wars influence their investments?
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What percentage of Britain's total overseas business assets was lost between 1938 and 1956?
What percentage of Britain's total overseas business assets was lost between 1938 and 1956?
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What significant event occurred for the Dutch colonial empire in 1949?
What significant event occurred for the Dutch colonial empire in 1949?
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Which two major historical events significantly impacted British and Dutch firms' foreign investment activities?
Which two major historical events significantly impacted British and Dutch firms' foreign investment activities?
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What characterizes the investment behavior of British and Dutch firms despite external shocks?
What characterizes the investment behavior of British and Dutch firms despite external shocks?
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What was a common consequence for Swedish firms during the early 20th century in terms of property?
What was a common consequence for Swedish firms during the early 20th century in terms of property?
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What is suggested to have become embedded in British and Dutch firms that influenced their investment strategies?
What is suggested to have become embedded in British and Dutch firms that influenced their investment strategies?
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What is a key factor influencing the organization of knowledge by firms in relation to multinationals?
What is a key factor influencing the organization of knowledge by firms in relation to multinationals?
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Which category is NOT identified as a home economy investor type?
Which category is NOT identified as a home economy investor type?
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Which country is categorized as a persistent investor in the home economies of multinationals?
Which country is categorized as a persistent investor in the home economies of multinationals?
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What impact do multinationals have on their home economies?
What impact do multinationals have on their home economies?
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Which of the following countries is considered a latecomer investor?
Which of the following countries is considered a latecomer investor?
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The chapter suggests that firms from different countries develop distinct capabilities due to what?
The chapter suggests that firms from different countries develop distinct capabilities due to what?
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What is the focus of the chapter regarding the relationship between multinationals and national economies?
What is the focus of the chapter regarding the relationship between multinationals and national economies?
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Which country is associated with erratic investing patterns according to the content?
Which country is associated with erratic investing patterns according to the content?
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What was one factor leading to the shift of control over the tobacco company BAT from the US to Britain?
What was one factor leading to the shift of control over the tobacco company BAT from the US to Britain?
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How did US defense budget advantages affect multinational investments after 1945?
How did US defense budget advantages affect multinational investments after 1945?
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What characteristic of small economies contributes to varying levels of FDI?
What characteristic of small economies contributes to varying levels of FDI?
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Which statement best describes the relationship between industrial structure and FDI in small economies?
Which statement best describes the relationship between industrial structure and FDI in small economies?
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What was a notable trend in the UK’s industrial landscape from the interwar years onward?
What was a notable trend in the UK’s industrial landscape from the interwar years onward?
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What factor helped the Japanese consumer electronics and automobile industries grow post-World War II?
What factor helped the Japanese consumer electronics and automobile industries grow post-World War II?
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What is suggested about the role of small and medium-sized companies in Scandinavian countries like Denmark and Norway?
What is suggested about the role of small and medium-sized companies in Scandinavian countries like Denmark and Norway?
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What was the impact of strict limits on inward FDI for the Japanese market?
What was the impact of strict limits on inward FDI for the Japanese market?
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What role do natural resources play in the sectoral distribution of foreign direct investment (FDI)?
What role do natural resources play in the sectoral distribution of foreign direct investment (FDI)?
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Which educational focus contributed to Sweden's competitiveness in advanced engineering products?
Which educational focus contributed to Sweden's competitiveness in advanced engineering products?
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What does 'absorptive capacity' refer to in the context of Sweden's international competitiveness?
What does 'absorptive capacity' refer to in the context of Sweden's international competitiveness?
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Which of the following best describes the influence of government as mentioned in the Porter Diamond model?
Which of the following best describes the influence of government as mentioned in the Porter Diamond model?
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What was a notable factor contributing to the U.S. leadership in computer and information technology industries?
What was a notable factor contributing to the U.S. leadership in computer and information technology industries?
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How did US antitrust laws impact collaborative behaviors in multinational companies?
How did US antitrust laws impact collaborative behaviors in multinational companies?
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Which of the following countries is mentioned for its firms emerging from a raw material base?
Which of the following countries is mentioned for its firms emerging from a raw material base?
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What specific factor provided the U.S. with a unique environment for creativity and innovation in technology?
What specific factor provided the U.S. with a unique environment for creativity and innovation in technology?
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Study Notes
Chapter 9: Multinationals and Home Economies
- This chapter examines the relationship between multinational corporations and their home economies.
- The organization of firms' knowledge is shaped by national institutions and entrepreneurship.
- Different nations develop distinct firm capabilities and structures.
- The chapter explores differences in investment propensities and geographical/sectoral investment distributions across firms from different countries.
- It analyzes the impact of multinationals on their home economies.
- The chapter discusses whether nationality still holds significance in the business context.
9.1 Multinationals and Nations
- This chapter investigates the association between multinational firms and their domestic economies.
- Firm knowledge organization stems from an interaction of national systems and entrepreneurship.
- Multinational firms develop unique capabilities and organizational structures based on their country of origin.
- Different strategies and structures in firms mirror these national attributes.
- The study explores the long-term disparities in investment preferences and geographical/sectoral investment patterns amongst various nationalities.
9.2 Home Economies Over Time
9.2.1 The Geographical Distribution of Multinationals
- This ownership pattern shows significant national variations in the timing of international business activities.
- A historical perspective identifies three types of home economies:
- Persistent investor: Examples include the United States and Britain. These investors have consistently invested overseas since the 19th century, even through economic downturn.
- Erratic investor: This group involves nations such as France and Germany, showing investment activities more intermittently compared to persistent investors.
- Latecomer investor: Countries like Italy, Singapore, and Brazil, initially invested internationally on a smaller scale in the 1960s and later saw rapid growth in this sector from the 1980s.
Persistent Investor
- Persistent investors started investing substantially in the 19th century, maintaining activity amidst fluctuating political and economic landscapes.
- The US is a primary example of a persistent investor, showing a consistent propensity to invest overseas.
- British companies' investment abroad, despite declining economic fortunes and the fall of the British Empire, is another prominent example.
Erratic Investor
- France and Germany's investment patterns are categorized as 'erratic'.
- A period of activity as direct investors before 1914 is noted.
- Japan, exhibiting late industrialization and lower incomes, transitioned to being an important investor.
- Initially, the investments were focused on trade and service sectors. Investments grew in Asia, specifically in China, which fostered a complex international business system.
Latecomer Investor
- Latecomer investors, mainly countries in Southern Europe, Asia, and Latin America (e.g., Italy, Spain, Hong Kong, Singapore, South Korea, Taiwan, Brazil), began substantial international investments in the 1960s, experiencing rapid expansion starting in the 1980s.
4. Wars and Chance
- World Wars significantly affected the investment patterns of certain countries. Internationalization in these countries became impacted by sequestrations of foreign assets.
- Germany and Japan's FDI experienced low levels due to the consequences of World Wars.
- The high investment propensity of Switzerland and Sweden is in part due their neutral stance during the world wars; this protected their overseas assets.
5. Firm, Nations, and Firms
- Home country characteristics play a part in understanding multinational firms' behaviors.
- While countries share similarities in firm strategies, firms from the same nationality don't necessarily share the same resources equally.
- Variation in performance among similar firms is a consistent theme.
- The Japanese auto industry of the 1980s and 1990s, while strong internationally, exhibited significant contrasts between leading firms (Toyota, Honda, and Nissan).
3. The Role of Culture
- National cultural values in part influence multinational organization and behavior.
- Cultural nuances are difficult to isolate and demonstrate.
- Analysis focusing on the home-country cultural impact on multinational corporations is complex and ongoing.
- Differences exist in outward investment levels, which possibly reflect varying outward- and inward-looking cultural inclinations.
2. Porter Diamond model of international competitive advantage
- Porter's model emphasizes the crucial home country environment in industries' global success.
- Key attributes of a home economy that promote competitiveness:
- Natural and created resource endowments
- Demand characteristics (quality and quantity of domestic consumers).
- Factors of production (efficiency and capability of industries).
- Firm strategy, structure, and rivalry.
- Government, and chance play a significant role that can affect the diamond's core attributes.
- National Variations in FDI based on natural resources
Evolutionary Model
- Investment patterns connect to a nation's economic development stage.
- GNP per capita correlates with countries' investment positions.
- Stages through which a developing economy passes: Pre-industrialization phase, and developing market phase, with a fall in inward investment, and eventual net outward investment with foreign investment exceeding that of domestic firms
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Description
This quiz explores Chapter 9, focusing on the complex relationship between multinational corporations and their home economies. It analyzes how national institutions influence firm capabilities, investment propensities, and the significance of nationality in business. Test your understanding of these key concepts.
