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37 th EIBA conference , Dec. 8-10, Bucharest

37 th EIBA conference , Dec. 8-10, Bucharest COST Panel Session on Emerging country multinationals. Challenges to data, companies, management and policy. Multinational firms from emerging countries and the impact on advanced economies: Evidence from the “COST Action”

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37 th EIBA conference , Dec. 8-10, Bucharest

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  1. 37th EIBA conference , Dec. 8-10, Bucharest COST Panel Session on Emerging country multinationals. Challenges to data, companies, management and policy Multinational firms from emerging countries and the impact on advanced economies: Evidence from the “COST Action” Stefano Elia, Politecnico di Milano (Italy) Filip De Beule, Katholieke Universiteit of Leuven (Belgium)

  2. WG3 Research Activity: an overview • WG3 research activity can be grouped into five main subgroups (SG): • SG 1: Focus of Southern Multinational and their impact on Europe (Micro or macro approach) • SG 2: Counterfactual analysis: comparison between Southern and Advanced Multinational (Micro or Macro approach) • SG 3: Relationship between strategies and impact • SG 4: Relationship between policies and impact

  3. Topics • Acquisitions • Related/unrelated deals • Knowledge seeking • Ownership selection • Impact • Price setting • Performance enhancing • Entrepreneurship • Diaspora • Policy

  4. Exploitation and exploration • Analysis of 808 acquisitions undertaken by BRIC in EU, USA and JP between 1999 and 2008 • Emerging market firms’ international experience and home-country characteristics are key determinants of acquisition behavior • Better CSAs, broader and diverse sources of knowledge positively influence absorptive capacity •  More explorative (unrelated) acquisitions • Acquisition experience in developed markets •  More exploitative (i.e. related) acquisitions • (Rabbiosi, Elia & Bertoni, MIR, forthcoming)

  5. Knowledge upgrading • Analysis of 104 acquisitions undertaken by BRIC in EU, USA and JP between 1999 and 2008 • The higher the country-specific disadvantages, the higher the probability to undertake knowledge-upgrading investments (i.e. acquisitions involving target firms with higher intangible assets than the acquiring firms). • However, as regards investments in HT industries, the opposite is true: the higher the country specific advantages, the higher the probability to undertake knowledge-upgrading investments, because HT industries require stronger initial absorption capabilities • (Elia and Santangelo)

  6. Ownership selection • Analysis on 820 acquisitions from emerging and advanced countries occurred in Italy from 2001 to 2010 • Emerging MNCs, compared to Advanced MNCs, prefer partial rather than full acquisitions as entry strategy • Partial acquisitions allow to compensate for emerging MNCs’ larger liability of foreignness and competitive disadvantages through absorption of knowledge from the partner • (Elia and Piscitello)

  7. Topics • Acquisitions • Related/unrelated deals • Knowledge seeking • Ownership selection • Impact • Price setting • Performance enhancing • Entrepreneurship • Diaspora • Policy

  8. Price setting • Analysis on acquisitions undertaken by emerging and advanced countries in Europe from 1996 to the present • Are emerging market firms paying more for their targets than developed market firms? • Are companies more valuable for emerging country multinationals? • What is the role of technological assets? • What about related upstream and downstream industries? • (De Beule and Somers)

  9. Performance enhancing • Analysis on 95 acquisitions undertaken by BRIC in EU and USA from 1999 to 2008 • The resources of BRIC MNCs have a significant positive impact on the performance of target firms located in EU & USA mainly when the acquiring firm can rely on previous acquisition experience in advanced countries • Previous acquisition experience in advanced countries allow indeed accumulating knowledge and capabilities to create synergies and complementarities between labor-intensive/cost-saving resources of EMNCs and capital/R&D intensive resource of target firms in advanced countries • (Buckley, Elia and Kafouros)

  10. Entrepreneurship • Case study on Embraer and on other Brazilian Multinationals in Portugal and Europe • Brazilian Investments in Portugal are likely to improve economic dynamism in countries/regions and in some specific industries which lack of “national champions” (e.g. Embraer in aerospace) • Firms in developed countries live in a zoo, while firms from emerging economies are used to the jungle! • (Carlos Cunha)

  11. Diaspora • Board member and top management in Chinese and Indian firms in Europe. • Difference between investment from industrial groups and entrepreneurs. • No outside board members and professional managers in entrepreneurial firms • Importance of diaspora in co-location of entrepreneurial firms. • (Zhang and Van Den Bulcke)

  12. Policy impact • Case studies on Chinese firms acquiring Icelandic lands: Beijing Zhongkun Investment Group Co. Ltd. and National Bluestar Group Co. Ltd company • Only the first firm was able to accomplish its deal since it was an indirect acquisition (through a Norwegian Subsidiary), while the second firm was stopped by national government due to a law that prevent non-EEA citizens from buying land in Iceland. • Large debate in Icelandic public opinion: should the Icelandic Government change its attitude towards non-EEA (such as Chinese) investors? • (Hannibalsson)

  13. Thank you for your attention • stefano.elia@polimi.it • filip.debeule@lessius.eu

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