Emerging-market MNEs investing in Europe. A typology of subsidiary global–local connections

Emerging-market MNEs investing in Europe. A typology of subsidiary global–local connections

International Business Review, 23(4): 680-691

The article is co-authored with Elisa Giuliani, Sara Gorgoni and Cristina Guenther.

It empirically investigates how subsidiaries of multinationals from both emerging (EMNEs) and advanced (AMNEs) economies investing in Europe learn from the local context and contribute to it as much as they benefit from it. To explore this we classify the behavior of MNE subsidiaries into different typologies on the basis of how knowledge is transferred within the multinational and on the nature of the local innovative connections. The empirical analysis relies on an entirely new, subsidiary-level dataset in the industrial machinery sector in Italy and Germany. Results show that EMNEs and AMNEs undertake different strategies for tapping into local knowledge and for transferring it within the company. We identify a new typology of EMNE subsidiary that contributes through its significant local innovative efforts to development processes in the host country. This result suggests possible win-win situations from which novel policy implications may be drawn.

The article has been reviewed in the Rising Powers Blog.



Chinese and Indian M&As in Europe: The relationship between motive and ownership choice

CIRCLE WP, 3, University of Lund, Lund. Forthcoming in The Routledge Companion to Merger and Acquisition; A. Risberg, D. King and O. Meglio (Eds); Routledge, London.

With L. Piscitello and V. Scalera

The present paper is about the ownership choices by Emerging Market Multinational Enterprises (EMNEs) when they invest in Europe through M&As, and the relationship with the main motivations underlying their international expansion. Namely, we claim that EMNEs prefer to acquire less control and keep the local partner when they invest for seeking knowledge. Additionally, EMNEs choose partial acquisitions in case of high dissimilarity in terms of culture, industry and knowledge base.
Our empirical analysis relies on a dataset of M&As undertaken by Chinese and Indian MNEs in high and medium-high tech sectors, in the period 2003-2011. We use content analysis of public announcements and company reports for classifying the main motivation of the acquisitions, and econometric analysis for testing our hypotheses. Our results confirm the expectations.


An analysis of Chinese outward FDIs in Europe with firm-level data

CIRCLE WP, University of Lund, Lund. Forthcoming in China and the World Economy.

With A. Amighini, C. Cozza and M. Sanfilippo

The empirical literature on China’s outward foreign direct investment (OFDI) mainly relies on aggregate data from official statistics, whose international reliability is currently a matter of concern, not taking account some relevant features such as the industry breakdowns, ownership structures and modes of entry. A novel firm-level database – EMENDATA – compiled by matching data from several available sources, on various types of cross-border deals, and including information on group structure, enables new empirical analyses and provides new insights into the rapidly increasing presence of Chinese companies abroad. In this paper, exploring the potential of this database we offer an informative and comprehensive assessment of the geographical and specialization patterns of Chinese outward FDI into Europe and suggest new avenues for further research on this highly policy relevant issue.


Proximity and scientific collaboration: Evidence for the global wine industry

Papers in Evolutionary Economic Geography, Utrecht University, Utrecht. Forthcoming in Tijdschrift voor economische en sociale geografie.

With L. Cassi and A. Morrison

International collaboration among researchers is a far from linear and straightforward process. Scientometric studies provide a good way of understanding why and how international research collaboration occurs and what are its costs and benefits. Our study investigates patterns of international scientific collaboration in a specific field: wine related research. We test a gravity model that accounts for geographical, cultural, commercial, technological, structural and institutional differences among a group of Old World (OW) and New World (NW) producers and consumers. Our findings confirm the problems imposed by geographical and technological distance on international research collaboration. Furthermore, it shows that similarity in trade patterns has a positive impact on international scientific collaboration. We find also that international research collaboration is more likely among peers, in other words, among wine producing countries that belong to the same group, e.g. OW producers or newcomers to the wine industry.


Gradual catch up and enduring leadership in the global wine industry

Papers in Evolutionary Economic Geography, Utrecht University, Utrecht.

With A. Morrison

The wine industry is an extremely interesting case from a catch up point of view because the latecomers in the international market have changed how wine is produced, sold and consumed and, in doing so, they have challenged the positions of incumbents. Until the end of the 1980s, the European countries, and particularly France and Italy, dominated the international market for wine. Subsequently, significant changes in the market, namely decreases in consumption by traditional consuming countries, the entry of new inexperienced consumers, and the increasing importance of large distribution have threatened this supremacy. Initially, the USA and Australia and later emerging countries such as Chile and South Africa, gained increasing market shares in both exported volumes and value, at the expense of incumbents. However, some of these new-comers (e.g. Australia) have shown slower growth, opening opportunities for newer entrants such as Argentina and New Zealand. At the same time, some of the incumbents (especially Italy) have innovated, which is challenging the leadership of France in key markets such the USA.
In this paper we investigate the different catch up cycles in the global wine sector that have occurred between the 1960s and 2010, through a detailed analysis of export volumes, values and unit prices. We address issues related to the increasing share in the global market of latecomer countries and the relative decline of the incumbents, as well as possible changes in the market leadership within these two groups.


Geographical Distance and Moral Hazard in Microcredit: Evidence from Colombia

Geographical Distance and Moral Hazard in Microcredit: Evidence from Colombia

Journal of International Development, 26(1): 91-108

An article written with Andrea Presbitero.

Recent years have seen an intense and critical debate about the impact of microcredit on entrepreneurial activities and poor households’ welfare. This paper suggests that information asymmetries in the ex-post loan arrangement between the micro_nance institution (MFI) and local borrowers could partially explain the limited impact of microcredit. The physical distance separating borrowers from the MFI could be considered as a proxy of agency costs, increasing the costs of monitoring and easing moral hazard. The estimation of the e_ect of distance on the borrower’s self-assessed outcome of a microcredit project in Colombia con_rms the presence of moral hazard in the microcredit market, with agency costs increasing with geographical distance.


Definitions matter. Measuring gender gaps in firms’ access to credit

IADB discussion paper, 314, Inter American Development Bank, Washington.

With C. Piras and A. Presbitero

The literature on gender-based discrimination in credit markets is recently expanding but the results are not yet definitive and have not been generally agreed upon. This paper exploits a new dataset on Barbados, Jamaica and Trinidad and Tobago, which provides detailed information about female ownership and management in firms for investigating the existence of a gender gap in access to finance. The evidence presented herein suggests that more precise measures of the gender composition of the firm show that women-led businesses are more likely to be financially constrained than other comparable firms.

Download the pdf, WP IADB 2013-10

Technology-Driven FDI: A Survey of the Literature

CIRCLE WP, 17, Lund University, Lund.

With A. Amighini, C. Cozza, E. Giuliani and V. Scalera

In the past century we have witnessed worldwide a growing flow of Foreign Direct Investment (FDI), which have attracted the attention of economists, international business and development scholars. In this scenario, two trends have recently gained momentum: the increasing relevance of Technology- driven FDI (TFDI) and the upsurge of Emerging Economies’ Multinational Enterprises (EMNEs) investing in advanced countries.
In this paper, we present a survey of the relevant literature on TFDI, with a focus on both AMNEs and EMNEs. After presenting the different phases of TFDI from Advanced Economy Multinational Enterprises (AMNEs), we focus on EMNEs and discuss the usefulness and limitations of the existing theoretical frameworks to interpret this new phenomenon. Next, the paper reviews the literature on EMNEs’ sources of competitive advantages and their main motivations for investing abroad. Finally, the paper explores the peculiarities of TFDI from emerging economies.


Innovation Drivers, Value Chains and the Geography of Multinational Corporations in Europe

Innovation Drivers, Value Chains and the Geography of Multinational Corporations in Europe

Journal of Economic Geography, forthcoming

The article is co-authored with Riccardo Crescenzi and Carlo Pietrobelli.

It investigates the geography of multinational companies’ investments in the EU regions. The ‘traditional’ sources of location advantages (i.e. agglomeration economies, market access and labour market conditions) are considered together with innovation and socio-institutional drivers of investments, captured by means of regional “social filter” conditions. This makes it possible to empirically assess the different role played by such advantages in the location decision of investments at different stages of the value chain and disentangle the differential role of national vs. regional factors. The empirical analysis covers the EU-25 regions and suggests that regional socio- economic conditions are crucially important for the location decisions of investments in the most sophisticated knowledge-intensive stages of the value chain.


The resilience of clusters in the context of globalisation: The basque wind value chain

European Planning Studies, 21(7): 989-1006

The article is co-authored with A. Elola and M.D. Parrilli.

In this paper we study how globalization impacts on the structure and governance patterns of value chains and on the resilience of local clusters. We study the value chains related to two Basque (Spain) companies in the wind energy industry, Iberdrola and Gamesa, and the local cluster to which they belong. We find that firms within the cluster have different types of relationships with lead companies depending on their competences and the complexity of their products. As a consequence, firms also present different potential for growth and/or resilience: some have the capacity to internationalize their operations and/or shift to the offshore wind market, others are vulnerable to competition from providers in the emerging countries. Against this context, we discuss how the cluster responds to these challenges and the role of policy.


China’s outward FDI: An industry-level analysis of host-country determinants

Frontiers of Economics in China, 8 (3), 903-936

The article is co-authored with Alessia Amighini and Marco Sanfilippo.

We empirically analyse the host country determinants of Chinese outward foreign direct investments (FDI) for the years 2003 to 2011, using disaggregated data by country and industry. Our results suggest that the host-country determinants of Chinese FDI differ between high- and low-income countries. While all Chinese FDI are invariably market seeking, other motivations stand out for different groups of sectors in specific country groups. The resource seeking motivation is relevant for manufacturing FDI to high-income countries with relatively high fuel abundance, and to low-income countries with primary resource abundance (other than fuels). Differently, the strategic-asset seeking motivation, measured by the level of R&D spending on GDP, positively and significantly only affects Chinese manufacturing and services FDI to OECD countries, while higher education levels are attraction factor for all investing firms. Natural resources are an important attraction factor for Chinese FDI, not only in resource-related sectors, but also in manufacturing and services sectors. Finally, Chinese FDIs tend to follow exports (rather than fostering them), especially in services sectors.


When do global pipelines enhance knowledge diffusion in clusters?

Economic Geography, 86(1): 77-96

This article is co-authored with Andrea Morrison and Lorenzo Zirulia.

Recent studies have stressed the role played by global pipelines in fostering the growth of clusters and innovativeness. In this article, we develop a formal model to investigate when global pipelines contribute to an increase in local knowledge, depending on various characteristics of clusters such as size, knowledge endowment, and the ease of transmission of internal knowledge. This model is an extension of Cowan and Jonard’s (2004) model in which we introduce the concept of cluster and a role for spatial proximity in the diffusion of knowledge. Our results reveal that there is a natural tendency of actors within global pipelines to act as external stars, rather than gatekeepers of knowledge. Global pipelines are beneficial for the accumulation of knowledge only if the cluster is either characterized by a high-quality local buzz or is small and weakly endowed in terms of knowledge.