AIB 2012 Conference Proceedings - Academy of International ...

MONDAY
Internal Communications, Shared Experience and Vicarious Learning: The Effects on Multinational Divisions'
Strategy and Performance
Michael David Lord, Wake Forest University
Annette Ranft, University of Tennessee
Paul Nagy, Florida State University
This study explores how the strategic choice and performance of one division of a multinational enterprise might
be influenced by the MNE's other divisions. Specifically, we examine whether a focal division's investment and
performance during expansion into a new host country are influenced by other divisions' prior experience and
learning. The richness of MNEs' internal communications is hypothesized to influence the interdivisional transfer
of host country knowledge, which in turn should influence a division's strategy and performance. Using a broad
sample of divisions within diversified MNEs, we find that knowledge transfer mediates the relationships between
MNE experience and divisional investment and performance. Our results help explain mixed findings in the
literature and further detail the heterogeneous dynamics and outcomes of MNEs' organizational learning
processes. (For more information, please contact: Michael David Lord, Wake Forest University, USA:
lordmd@wfu.edu)
Psychic and Cultural Distance Effects on Corporate Performance: Re-evaluating an Ambiguous Relationship
Fragkiskos Filippaios, University of Kent
Ruth Rama, CCHS-CSIC (Spanish National Research Council)
The main aim of this paper is to shed light on the effects of psychic and cultural distance on the performance of
multinationals. Both types of distance present costs for the multinational and increase the liability of
foreignness. Although both measures of distance have been included in a number of studies and thoroughly
explored in the literature, their effect still remains ambiguous from a conceptual and empirical perspective. On a
theoretical level we develop a conceptual framework that explains the channels through which culture and
psychic distance influence the performance of multinationals and from an empirical perspective we use a
dataset that allows us to empirically investigate the main arguments developed. By using a sample of the
world's 100 largest Food and Drink Multinational Enterprises (F&D MNEs) over three time periods (i.e. 1996,
2000 and 2002) and their nearly 8,000 affiliates, per period, classified by line of business (e.g. food, retailing,
etc.) we explore dynamic aspects in the MNEs' development. To the best of our knowledge this is the first
study that sheds light to the effect of psychic and cultural distance on the performance of multinationals at the
level of activity and by using a number of different distance measures rather than a combined distance
measure. Our results show the significant need to understand further psychic and cultural distance and establish
more detailed and better defined measures that could provide guidance for managers when making foreign
direct investment decisions. (For more information, please contact: Fragkiskos Filippaios, University of Kent,
United Kingdom: f.filippaios@kent.ac.uk)
R&D Investment, Performance above Aspirations and National Culture: Evidence from the Paper Products
Industry
Krista Burrill Lewellyn, Old Dominion University
Shuji Bao, Old Dominion University
Investing in R&D to create knowledge and generate innovation is particularly relevant for MNCs competing in
today's globalized knowledge-based economy. We theorize and demonstrate empirically with a sample of paper
product industry firms from 11 countries that outperforming competitors in the past (performance above
aspiration level) motivates R&D investment. We also generate theory and supportive empirical findings that
show dimensions (power distance, uncertainty avoidance, and institutional collectivism) of a firm's home
country national culture create a context that either encourages or discourages firm level R&D investment. (For
more information, please contact: Krista Burrill Lewellyn, Old Dominion University, USA: klewelly@odu.edu)
AIB 2012 Conference Proceedings
Page 110