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Why do some multinational firms respond better than others to the hostility of host governments? Proximal embedding and the side effects of local partnerships

Moschieri, Caterina; Ravasi, Davide; Huy, Quy; (2022) Why do some multinational firms respond better than others to the hostility of host governments? Proximal embedding and the side effects of local partnerships. Journal of Management Studies 10.1111/joms.12809. (In press). Green open access

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Abstract

Using a multiple-case study of alleged expropriations reported before the World Bank, we examine how multinational companies (MNC) react to the escalating hostility of host governments. Our study reveals how different choices regarding the interaction with local nonmarket stakeholders – which we refer to as proximal vs. mediated embedding – shape how managers respond to these disputes by affecting their ability to collect, process and interpret information, and to act upon it in a way that effectively mobilizes local and international support. In contrast to the prevailing view that local partners in international joint ventures shelter MNCs from abuse from political authorities, our findings show that primary reliance on local partners to manage the local nonmarket environment can actually reinforce a liability of outsidership and even create a ‘liability of insidership’, to the extent that relying on local partners prevents the MNC from establishing quality connections with a broad range of nonmarket stakeholders, reducing its alertness and responsiveness to hostile acts from host governments.

Type: Article
Title: Why do some multinational firms respond better than others to the hostility of host governments? Proximal embedding and the side effects of local partnerships
Open access status: An open access version is available from UCL Discovery
DOI: 10.1111/joms.12809
Publisher version: https://doi.org/10.1111/joms.12809
Language: English
Additional information: © 2022 The Authors. Journal of Management Studies published by Society for the Advancement of Management Studies and John Wiley & Sons Ltd. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
Keywords: business-government relationships, obsolescent bargaining, expropriation, nonmarket strategies, exit, decision firm-government dispute
UCL classification: UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL
URI: https://discovery.ucl.ac.uk/id/eprint/10145049
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