InsIghtsVol. 19, No. 3, 2019

Essays on Organization, Creativity, and GlobalizationSungyong Chang

p3Foreign Direct Investment in Global Cities and Co-Ethnic Clusters:

Characteristics, Profitability, and Survival Dwarka Chakravarty

p7Contemporary Perspectives on Internationalization: Subnational, Regional, Digital

Maximilian Stallkampp12

Bloody Business: Multinational Investment in an Increasingly Conflict-Afflicted WorldCaroline Theresia Witte

p16

Academy of International Business

An official publication of the Academy of

International Business

Special Issue on the 2019 Peter J. Buckley and Mark Casson AIB Dissertation Award

This issue of AIB Insights is our seventh annual focused issue highlighting research from fi-nalists of the Peter J. Buckley and Mark Casson AIB Dissertation Award. Since 2013, these issues have served as an invaluable conduit for the timely dissemination of the latest, state-of-the-art dissertation research in international business, and we proudly continue this tradition. As in the six previous years, this special issue publishes extended dissertation abstracts of this year’s award-winning and award-nominated dissertations. Our contributing authors summa-rize their dissertation research to capture their extensive and exceptional scholarly endeavors in a “nutshell.”

2019 Buckley and Casson AIB Dissertation Award winner:

“Essays on Organization, Creativity, and Globalization” by Sungyong Chang, London Busi-ness School (Ph.D. awarded by Columbia University)

BIG Question: How does the globalization of digital innovations facilitate the discovery of talent and how can firms benefit from the globalization of digital innovations?

Award-nominated dissertations (in alphabetical order):

“Foreign Direct Investment in Global Cities and Co-ethnic Clusters: Characteristics, Perfor-mance, and Survival” by Dwarka Chakravarty, San Diego State University (Ph.D. awarded by Ivey Business School, Western University)

BIG Question: How does subsidiary location within global cities and co-ethnic clusters impact the characteristics, profitability, and survival of foreign direct investment?

“Subnational, Regional, Digital: Contemporary Perspectives on the Internationalization of Firms” by Maximilian Stallkamp, Virginia Tech (Ph.D. awarded by Ivey Business School, Western University)

BIG Question: How is the internationalization of contemporary firms shaped by (1) subnational/regional factors and (2) by digital business models?

“Bloody Business: Multinational Investment in an Increasing Conflict-Afflicted World” by Caroline Witte, Copenha-gen Business School (Ph.D. awarded by Erasmus University Rotterdam)

BIG Question: What determines multinational enterprises engagement in conflict countries?

On behalf of the AIB community, we would like to thank this year’s Buckley and Casson AIB Dissertation Award Se-lection Committee for their invaluable and dedicated efforts, work, and commitment: Shige Makino (Chair), David Reeb, Marcus Møller Larsen, and Tatiana Kostova.

On pages 20-21 in this issue, we provide an overview of previous winners of this prestigious award, starting with the award’s founding year of 1968.

Congratulations to the 2019 AIB dissertation awardee and finalists for their significant accomplishments!

John Mezias, Editor

William Newburry, Associate Editor

LEtter from the editors

2 AIB insights

3Vol. 19, no. 3, 2019

Introduction

Do technological advancements such as digital innovation or artificial intelligence facilitate human creativity and innova-tion? Global media and Internet conglomerates such as Apple and Google have been introducing new digital innovations all over the world and have been dominating the global market. As this trend has intensified, there has been a growing concern around the relationship between technological innovations and creativity. This concern has called for more systematic research on whether these new digital technologies will have a comple-mentary relationship with human creativity, especially in firms’ discovery of creative talent. My dissertation aspires to produce useful insights on how managers can leverage opportunities from the globalization of new digital innovation. To attain this goal, my dissertation first explores opportunities and threats from the globalization of digital innovations and then exam-ines how managers can leverage such opportunities and avoid threats in talent discovery and competitive dynamics.

The emergence of platforms and media companies in the mod-ern digital economy challenges the existing internationalization theory and practice. Due to their multisided market nature of many digital innovations, the internationalization process of platforms and media companies depends critically on lo-cal complementors (i.e., content providers) in the host coun-try market, as well as the commitments of global platforms

and media companies, which is the main focus of the Uppsala model. My dissertation investigates when global platforms are conducive to the discovery of new talent, and how global me-dia companies may overcome the liability of foreignness and how they can overcome this liability. Thus, my dissertation at-tempts to contribute to a burgeoning literature in international business, specifically, the globalization of digital platforms and media companies (e.g., Johanson & Vahlne, 2009; Alcácer, Cantwell, & Piscitello, 2016; Chen, Shaheer, Yi, & Li, 2019) and produce useful managerial insights.

To explore the relationship between technological innovation and human creativity, we need a better understanding of the topic of discovery of new talent. I want to emphasize that the discovery of new talent is an essential yet underexplored type of innovation. This goes back to the classic classification of inno-vation types proposed by Schumpeter (1934). He distinguishes among the following five types of innovation: new products, new processes, new organizations, new markets, and new re-sources. Most prior work focuses on the first four types of in-novation. This study focuses on the last type of innovation, the discovery of new resources, in creative industries where artist talent – a type of resource – is the most important source of creativity and profit (Caves, 2000; Tervio, 2009).

This article summarizes my dissertation which examined the following three-related questions. The first essay explores how managers in music companies benefit from the globalization of the digital market for unbundled products by unleashing hu-man creativity and innovation in local users and complemen-tors. I utilize the staggered entry of iTunes into 29 countries to identify a causal impact of the introduction of the digital market for unbundled products.

Essays on Organization, Creativity, and GlobalizationSungyong ChangPh.D. awarded by Columbia University, USA (May 2018)

BIG Question:How does the globalization of digital innovations facil-itate the discovery of talent and how can firms benefit from the globalization of digital innovations?

Special Issue on the 2019 Peter J. Buckley and Mark Casson AIB Dissertation Award

4 AIB insights

The second essay examines how entrepreneurs benefit from the globalization of the digital self-release market. The second essay focuses on the competitive dynamics between incumbents and entrepreneurial firms in the host country to identify opportu-nities and threats from the globalization of the digital self-re-lease market. I exploit the staggered entry of YouTube into 29 countries to identify a causal impact of the introduction of the digital market for self-releases.

In the third essay, I explore how the subsidiaries of global me-dia companies can overcome the liability of foreignness in dis-covering local talent in the host countries. I analyze all global media conglomerates’ acquisitions of foreign country music labels during 1988-2015.

To answer these questions, I build a dataset collected and matched from multiple large-scale datasets, including the Spotify APIs, MusicBrainz, Discogs, and Quantone databases. The sam-ple covers 165,464 artists, 2,349,776 songs, and 22,157 music companies in 29 countries for the period from 1950 to 2015.

How Can Managers Benefit from the Digital Market for Unbundled Products?

The first essay explores the impact of the introduction of a market for unbundled products by a global platform company on experimentation and the discovery of new talent of local music companies. Digitalization has spurred a fundamental unbundling of creative industries. In the music industry, for instance, digitalization has enabled music to be purchased as both individual songs (i.e., a single) and a bundle of songs (i.e., an album). Due to the piracy problem, there is a concern that digitalization makes it more difficult for record labels to fund the release of new music. I argue that music labels, especially small local labels, can mitigate the negative impact from such a challenge by producing singles because the major bottleneck for the discovery of new music and talent is the high cost of traditional album production.

I test this idea by utilizing the staggered market entry of the iTunes Music Store into 29 countries as an exogenous shock. The introduction of iTunes has significantly increased the commercial importance of singles because music is sold in the form of individual songs that were previously only or primarily sold as parts of albums. I find that the benefit from producing singles (increased experimentation) outweighs other potential adverse effects. First, single-producing firms experiment with more new artists than album-only-producing firms. Specifical-ly, the proportion of new artists to all artists is 27.25% (a 4.62% point) higher in single-producing firms than in album-on-ly-producing firms. In contrast, as information on artist talent

from a one-shot unbundled experimentation is less accurate than that from albums, single-producing firms make 29.75% more omission errors. Overall, the results suggest that the pos-itive effect from the decreased cost of experimentation out-weighs the negative effect from the loss of information quality on talent; Single-producing firms discover artists with greater talent and produce more popular songs; that is, the most pop-ular artist and song in single-producing firms are more popular than those in album-only-producing. Finally, single-producing firms are more likely to discover artists who created at least one new genre, suggesting that unbundling facilitates the creation of new markets.

The first essay exploits a unique empirical setting to make a credible causal inference about the impact of unbundling on experimentation and creativity. However, the idiosyncrasies of the music industry should not cloud the general applicability of the conceptual approach to a broad range of firms and in-dustries. The first essay highlights how the introduction of the digital market for unbundled products changes the business environment for managers who are in charge of discovering new talent. On the one hand, the low cost of experimentation from unbundling helps small and young firms that are under financial constraints. The findings suggest that managers in small companies should leverage the low cost of experimen-tation and capture opportunities arisen from the market for unbundled products by experimenting with newer and more radical business ideas or projects. On the other hand, managers in large firms should cope with such threats of small and young firms by lowering the chance of missing out on talented em-ployees or early-stage business projects in which they invested.

How Can Managers in Entrepreneur-ial Firms Benefit from the Digital Market for Self-Release?

The second essay investigates whether the digital market for self-release facilitates the discovery of talent by entrepreneurial firms in the host country. An unknown artist has trouble get-ting a contract with music labels that will fund money to create new music. Thanks to digitalization, artists can self-release and promote with low cost thought digital platforms. For example, artists can develop their track record and profit from views on YouTube.

Whereas a self-release market has a clear benefit for unknown artists, the self-release market may have a negative influence on the entrepreneurial firms’ discovery of new talent. The com-parable set of entrepreneurial firms in the music industry will be independent labels. Some independent labels were reason-ably successful in discovering new talent, and these indepen-

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dent labels made a profit by producing more releases with new popular artists or being acquired by the major labels. Because the self-release market provides would-be artists with informa-tion regarding their talent, talented artists have good bargain-ing power when they sign a contract with a music label. For example, Elvis Presley is one of the most significant cultural icons of the 20th century and is referred to as “the King of Rock and Roll.” Because Elvis himself did not know his talent, he signed with Sun Records, a small entrepreneurial music label, in the hope of being discovered. Thus, the self-release market may make it more difficult for entrepreneurial firms to sign a contract with the next Elvis Presley because incumbent labels have better resources to attract those talented artists, such as (so-called) YouTube stars.

In testing this theory, I exploited YouTube’s staggered market entry into 29 countries (the introduction of the localized ver-sion with the local language), and this study produces results from a difference-in-difference-in-differences (DDD) specifi-cation. The results suggest that the introduction of a self-re-lease market decreases the discovery of new artists by local entrepreneurial firms. In contrast, in response to losing new talent, entrepreneurial firms increase their reliance on medio-cre incumbent artists, resulting in lower average performance. The average popularity of new artists in entrepreneurial labels decreased by at least 26%, and it reached a level similar to the average popularity of new artists in incumbent labels. Consid-ering that entrepreneurial firms have relied on the discovery of new talent regarding the proportion of new artists (their pro-portion of new artists is approximately 20% higher than that of incumbent labels), the discovery performance of entrepreneur-ial labels became lower than that of incumbent labels.

There are several important takeaways from these findings. First, these findings emphasize that the digital self-release mar-ket for unknown artists inadvertently may increase competi-tion in the resource market, resulting in entrepreneurial firms experiencing a disadvantage in discovering talented employees. Second, in the presence of a thriving self-release market like YouTube, managers in entrepreneurial firms need to put more effort and invest more money in discovering new talent and by reducing their investment in mediocre incumbent employees.

Can Global Media Conglomerates Create a Synergy with Acquired Host Country Subsidiaries?

This essay examines how global media conglomerates’ acqui-sition can create synergies with acquired foreign music labels in the discovery of new talent. A growing number of Chinese media and Internet conglomerates have been buying Korean

music labels to strengthen their synergy between media tech-nology and the popularity of K-pop. Will Chinese ownership affect the acquired Korean music labels’ search for Korean talent (local market) negatively or positively? One argument suggests that global media conglomerates may undermine the discovery of new talent from the host country because these conglomerates often lack a good understanding of the host country culture. For instance, the New York Times highlight-ed their concern regarding Sony’s liability of foreignness when Sony acquired CBS records (a US music label) in the 1980s. One columnist wrote of the Japanese, “They make good cars, TV sets, tractors. However, will they, or the executives they hire, know another Duke Ellington when they hear one?”

Although there is the liability of foreignness from foreign own-ership, global media conglomerates have offsetting advantages (e.g., additional cash flow and know-how from the synergy be-tween content and other media and technologies) that can be transferred to a foreign subsidiary. I argue that, mainly, man-agers in the acquired host country subsidiaries can leverage the increased capital flow media from global media conglomerates to solve the critical bottleneck in the talent discovery process: the high cost of experimenting with new artists.

I analyze global media conglomerates’ acquisitions of foreign country music labels during 1988-2015. The estimates from a difference-in-differences (DD) specification suggest that, during the study period, global media conglomerates did not undermine the host country’s discovery of talent that was deeply rooted in its local culture. The results suggest that global media conglomerates do not undermine the host country’s discovery of local talent. In particular, except for Matsushita’s acquisition of RCA in 1990, the long-term effect of the acquisitions on the discovery of local talent is either positive or null. For example, in the above case of Sony’s acquisition of CBS Records in 1988, which is the first merger by a Japanese firm with a firm of a distant culture. Sony did not undermine CBS Records’ discov-ery of domestic new talent but increased the popularity of new host country artists in CBS Records by 44.48%. In contrast, Sony’s acquisition decreased CBS Records’ reliance on incum-bent artists and foreign (outside the US) artists.

The third essay attempts to provide evidence on the benefits of synergy between content and technology can be leveraged through globalization, even in sensitive industries such as cul-tural industries. The first key takeaway is that although there is a growing anti-globalization sentiment throughout the world, the managers in global media conglomerates can serve the local market’s tastes and desires successfully. Second, managers in global media conglomerates can create synergy between their advantages in financial resources with host country subsidiar-ies’ local knowledge. Third, the qualitative evidence shows that host country subsidiaries’ autonomy in the talent discovery process plays a pivotal role in creating synergies between the global media conglomerates and host country subsidiaries.

6 AIB insights

Conclusions and Implications

Since the works of Hymer (1960), Vernon (1992), and Caves (1971, 1996, 2000), the nature of the relationship between multinational enterprises and innovation has always been at the heart of the theory of the multinational enterprise. I mainly explore how digital technologies have transformed and revolu-tionized the current business environment around the multina-tional enterprise. With the digital transformation, new forms of multinational enterprises have been emerging, which are un-accounted for by received wisdom in the international business literature. The global expansion of digital platforms and media companies is one of the such accounted forms. Digital plat-forms such as iTunes and YouTube provide an Internet-based platform to lower the cost of experimenting with new talent. The lowered cost of experimentation may or may not facilitate the discovery of new talent depending on the nature of the ser-vice and competitive dynamics between established firms and entrepreneurial firms.

The first two essays offer managerial implications for managers. These two essays demonstrate that not all digital technologies are conducive to talent discovery in small and entrepreneurial firms. The key takeaway of the first essay is that although there are benefits of unbundling, unbundling may also have a neg-ative impact on the discovery of new talent because it will be challenging for these firms to infer an artist’s true talent from a one-shot unbundled experimentation result of success or fail-ure. Thus, managers should set an effective discovery strategy to solve this potential trade-off.

The key takeaway from the second essay is that the introduc-tion of the digital market for self-releases mainly poses a threat to entrepreneurial firms’ talent discovery process as undiscov-ered artists can experiment with their talent without the help of entrepreneurial firms. Thus, managers in entrepreneurial firms should invest more money in the talent discovery process and find out another source of talent discovery than the dominant self-release platform like YouTube.

Finally, the third essay offers insights on how global media companies create synergies with their foreign subsidiaries. As Ghemawat (2016) notes, even though global digital platforms offer global connectivity among users and complementors, user interactions on digital platforms are mostly domestic, and that national borders still matter in cyberspace. The third essay demonstrates how global digital platforms and media com-panies can overcome this paradoxical situation. The findings suggest that even though digital platforms have entered many countries and have become the dominant platform in many countries, managers in these companies should let their foreign subsidiaries put forth a substantial amount of localization ef-fort to solve such paradoxical situations.

References of Dissertation Abstract

Alcácer, J., Cantwell, J., & Piscitello, L., 2016. Internationalization in the information age: A new era for places, firms, and internation-al business networks?. Journal of International Business Studies, 47(5): 499-512.

Caves, R. E. 1971. International corporations: The industrial economics of foreign investment. Economica, 38(149): 1-27.

Caves, R. E. 1996. Multinational Enterprise and Economic Analysis. Cambridge: Cambridge University Press.

Caves, R. E. 2000. Creative Industries: Contracts between Art and Com-merce. Boston: Harvard University Press.

Chen, L., Shaheer, N., Yi, J., & Li, S., 2019. The international penetra-tion of ibusiness firms: Network effects, liabilities of outsidership and country clout. Journal of International Business Studies, 50(2): 172-192.

Ghemawat, P. 2016. People are angry about globalization. Here’s what to do about it. Harvard Business Review.

Hymer, S. H. 1960. The international operations of national firms, a study of direct foreign investment. Ph. D. thesis, Massachusetts Institute of Technology.

Johanson, J., & Vahlne, J.E. 2009. The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership. Journal of International Business Studies, 40(9): 1411-1431.

Schumpeter, J. A. 1934. The Theory of Economic Development. New York: Routledge.

Tervio, M. 2009. Superstars and mediocrities: Market failure in the dis-covery of talent. The Review of Economic Studies, 76(2): 829-850.

Vernon, R. 1992. International Investment and International Trade in the Product Cycle. The Quarterly Journal of Economics, 80(2): 190-207.

Sungyong Chang (schang@london.edu) is an assistant professor of Strategy and Entrepreneurship at London Business School. He received his PhD degree in Management from Columbia Univer-sity. He is interested in innovation, globalization, and computa-tional social science. His particular focus is on the impact of the globalization of digital innovations on the discovery of talent and invention of new products in high-tech and cultural industries.

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Foreign Direct Investment in Global Cities and Co-Ethnic Clusters: Characteristics, Profitability, and Survival Dwarka ChakravartyPh.D. awarded by Ivey Business School, Canada (August 2018)

Special Issue on the 2019 Peter J. Buckley and Mark Casson AIB Dissertation Award

Introduction

The traditional approach of using entire countries as location units of analysis in IB research obscures micro-level drivers which better explain FDI choices and consequences (Beugels-dijk & Mudambi, 2013). Recognizing this, of late there has been greater focus on using finer-grained, sub-national units such as states, metropolitan statistical areas (MSAs), cities, and clusters.

This article is motivated by two important, yet understudied phenomena regarding sub-national FDI. The first is the attrac-tion of FDI towards “global cities” (GCs) such as New York, Los Angeles, and Toronto. Commencing in the 1980s, the in-ternationalization of production and services and consequent increase in economic and geographic complexity accelerated

the rise of certain cities as command and control points for MNEs. Cities such as London, New York, Tokyo, and Hong Kong which provided an advanced level of professional services and connectivity for managing these global production net-works became highly influential in the world economy. Sassen (1991) defined such cities as global cities. Based on her work, a widely used list of world cities was developed (Beaverstock, Smith, & Taylor, 1999) which includes 23 in North America (see Table 1). GCs provide MNEs with a range of economic, institutional, and ecosystem advantages including connections to local and global markets, cosmopolitan environments, and advanced services (Goerzen, Asmussen, & Nielsen, 2013). Of-fering much more than new markets to MNEs, they serve as strategic points for access to and exchange of knowledge, tech-nology, capital, and skilled human resources (Wagner, 2008).

The second motivating phenomenon is the tendency of MNEs to agglomerate in close proximity to their home country and industry peers in clusters, that are not limited by administra-tive boundaries of cities and metro areas. Japanese firms often seek out US locations where other Japanese firms are located; as do English, German, and Korean firms (Crozet, Mayer, & Mucchielli, 2004). Within such co-ethnic concentrations, we often find clusters of subsidiaries belonging to the same in-

BIG Question:How does subsidiary location within global cities and co-ethnic clusters impact the characteristics, profitability, and survival of foreign direct investment?

8 AIB insights

dustry sector. I denote these as “co-ethnic and co-industry” (CECI) clusters. Subsidiary location in co-ethnic (CE) and co-ethnic and co-industry (CECI) clusters can be advanta-geous for several reasons. Co-ethnicity provides a basis for trust through a common cultural, linguistic, and social ground, en-abling economic interaction and information sharing. This is particularly valuable when tacit and sensitive knowledge is in-volved (Chang & Park, 2005). CECI clusters can promote pos-itive knowledge spillovers because firms from the same home country and industry are more likely to have similar technolo-gy and management practices. CECI clusters can also provide resource, efficiency, and scale benefits via access to specialized labor and suppliers, reduced transportation costs, and sharing of equipment and infrastructure (Kim, Delios, & Xu, 2010; Marshall, 1920).

Research Rationale

Substantial FDI is directed towards GCs, their metropolitan areas (metros), and co-ethnic clusters. For instance, from 1990-2014, nearly 50% of Japanese subsidiaries in North America were established in 23 GCs and their metros out of a possible 415 such North American MSAs (See Figure 1). Across all lo-cations (GCs, metros, others), close to 65% of all subsidiaries were established in co-ethnic clusters and over 40% were estab-lished in co-ethnic and co-industry (CECI) clusters. Despite its pervasiveness, research regarding FDI in GCs, metros, and co-ethnic clusters remains underexplored and lacks compre-hensive and precise examination using large longitudinal sam-ples, multi-level methods, and geo-spatial analysis that bridges IB and economic geography. Hence, we know very little about how these sub-national locations affect investment character-istics, and if they provide performance benefits that overcome potentially adverse effects of cost, competition, and negative knowledge spillovers.

This article focuses on the above gaps by addressing the fol-lowing research questions. First, how do subsidiary and MNE characteristics differ between GCs, metros, and other loca-tions? Second, how does subsidiary performance (profitabili-ty and survival) differ between these locations? Third, how do co-ethnic and CECI clusters impact subsidiary performance?

This article will help MNE managers better understand the risks vs. rewards of specific location choices in North America and actions they can take to improve their odds of success.

Figure 1. Japanese FDI in North America (1990-2013). Source: Toyo Keizai, 2014.

Research Design

A sample of Japanese subsidiaries in North America over the time period 1990-2013 from the Toyo Keizai 2014 database was used. The sample comprises 25,347 subsidiary-years (2,863 unique subsidiaries of 1,605 MNEs). 23 North Ameri-can GCs were identified from Beaverstock et al.’s (1999) widely used list, which is consistent with Sassen’s (1991) GC concept, and whose listing year is close to the middle of the data range.

To obtain a precise measure for subsidiary location (i.e., GC/metro/other), subsidiary street addresses were converted to the corresponding latitude and longitude using Google Maps. Then ArcGIS 10.5 software was used to plot each subsidiary co-ordinate (latitude, longitude) as a point on a geospatial map of North America. US and Canada census map layers were added to delineate GC limits, GC metro areas, and oth-er locations (outside of GCs and metros) To illustrate, Figure 2a (on the left) depicts subsidiaries (black dots) in the GC of Chicago (cross hatched), and its surrounding metro area (black outlined).

Clusters were determined (at a 95% confidence level) based on geo-spatial location, proximity, and density analysis using

Canada USACalgary Atlanta Columbus Los Angeles RichmondMontreal Boston Dallas Miami San FranciscoToronto Baltimore Detroit Minneapolis SeattleVancouver Chicago Houston New York Washington DC

Cleveland Kansas City Philadelphia

Table 1: Global Cities in North America

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the Optimized HotSpot tool in ArcGIS 10.5. This tool identi-fies statistically significant spatial clusters based on the number of neighbors for each subsidiary within a given geographical boundary. Consistent with prior research (e.g., Stallkamp, Pinkham, Schotter, & Buchel, 2018), a 15-kilometre bound-ary radius was used. To identify co-ethnic clusters, the analysis was conducted for subsidiaries across all industry sectors. To identify co-ethnic and co-industry (CECI) clusters the analysis was done for groups of subsidiaries within each of the following industry sectors - automotive, electronics, machinery, financial services, real estate, and transportation. Figure 3a (on the left) shows a cluster of Japanese automotive subsidiaries in the De-troit-Windsor area and Figure 3b (on the right) shows a cluster of Japanese chemicals subsidiaries in the Los Angeles area.

For regressions, a multi-level longitudinal model was applied wherein subsidiaries are nested within firms and repeated mea-sures over time are nested within subsidiaries. Ordinal logistic regression and a parametric hazard model were used for prof-itability and survival analysis respectively, with both models accounting for non-proportional odds.

Findings

CharacteristicsFDI in GCs substantially differs from metros and other locations across sub-sidiary and MNE characteristics. A GC subsidiary is likely to be a smaller size, wholly owned services unit, with a rela-tively high percentage of expatriate em-ployees; a metro subsidiary is likely to be an intermediate size wholesale op-eration, with a lower percentage of ex-patriate employees; while a subsidiary operating outside of these areas is likely a large manufacturing unit with the lowest percentage of expatriates. See

Table 2. MNEs operating across all three areas have the high-est levels of tangible assets and advertising intensities, however MNEs operating in metros and other locations have interme-diate levels of tangible assets but the highest R&D intensities, and MNEs operating outside of GCs and metros have the low-est levels of tangible and intangible assets. See Tables 2 and 3.

ProfitabilitySubsidiaries in GCs and metros are twice as likely to be profit-able relative to their counterparts in other locations. These out-comes are strengthened for services subsidiaries in GCs which are 2.5 times more likely to be profitable than peers in other lo-cations; and manufacturing subsidiaries in metros which have 2.5 times and 1.7 times greater profitability odds than peers in other locations and GCs respectively. Both co-ethnic (CE) and co-ethnic and co-industry (CECI) clusters further boost subsidiary profitability. CE cluster membership improves GC subsidiary profitability odds by 1.7 times, and GC and metro subsidiaries in CECI clusters are 2.5 to 3 times more likely to be profitable.

Survival Subsidiaries in GCs and metros are less likely to survive (face about 1.4 times higher exit risk) relative to their peers in other locations. Services subsidiaries in GCs and manufacturing subsidiaries in metros face 2 times and 1.4 times higher exit risk relative to their industry peers in other locations. While exit risk does not significantly differ for subsidiaries in CE clusters, CECI clusters reduce exit risk by 5 times in locations outside of GCs and metros.

Figures 2a and 2b. Japanese Subsidiaries and Co-Ethnic Clusters in Chicago and Its Metro Area

Figures 3a and 3b. Co-Ethnic and Co-Industry Clusters – Detroit (Automotive) and LA (Chemicals)

10 AIB insights

Table 4 provides a comparison of subsidiary profitability and survival findings. These suggest that while average subsidiary profitability in GCs and metros is better than in other loca-

tions. the survival prospects are worse. In GCs and metros, the challenges of higher costs and competition may give rise to a number of moderate and poor performing subsidiaries.

Such subsidiaries may face survival challenges, due to the weight of corporate expectations and added scrutiny regarding financial performance in such high-profile locations. In contrast, literature sug-gests that a corporate-level understanding of the challenges that subsidiaries face in less munificent locations (e.g., outside of GCs and metros), enables them to survive even when they perform poorly. MNE corporate managers may persevere with such subsidiaries based on a longer-term outlook of de-veloping experience, and gradually improving le-gitimacy, market share, and performance (Chacar & Vissa, 2005).

Subsidiary Characteristic GCs Metros OtherAverage Employees 117 145 253Average Expatriates 11.6 8.5 6.3Expatriates % (of Employees) 14.3 8.7 4.7Wholly Owned % 81.2 78.4 64.0Services % 47.7 34.9 17.4Manufacturing % 11.1 28.8 60.1Wholesale % 26.2 59.2 14.6

Location Profitability SurvivalGlobal City 2 times greater odds of profitability vs.

other locations; and 2.5 times for Services subsidiaries; differences with metro peers not significant.

1.5 times exit risk vs. other locations; and 2 times for Services subsidiaries; differences with metro peers not significant.

Metro 2 times greater odds of profitability vs. other Locations; Mfg. subsidiaries 2.5 and 1.7 times more likely to be profitable relative to peers in other locations and GCs.

1.3 times greater exit risk vs. other locations; 1.4 times for Mfg. subsidiaries; differences with GC peers not significant.

Other As above As above

Co-Ethnic Cluster

1.7 times greater odds of profitability relative to un-clustered peers in metros; insignificant in GCs and other locations.

No significant differences in exit risk relative to un-clustered peers.

Co-Ethnic, Co-Industry Cluster

3 times and 2.5 times more likely to be profitable relative to un-clustered peers in GCs and metros respectively; insignificant in other locations.

Exit risk 5 times lower than un-clustered peers in other locations; insignificant in GCs and metros.

Table 2: (Selected) Subsidiary Characteristics

MNE Characteristic (Averages)

MNEs with sub-sidiaries in GCs & metros & other locations

MNEs with sub-sidiaries only in metros & other locations

MNEs with subsidiaries only in other locations

Employees 22,775 8,732 2,535

Revenue (‘000 USD) 1,506,983 287,843 69,956

Assets (‘000 USD) 1,345,532 286,862 64,404

International Experience (years) 687 262 95

R&D Intensity % 2.3 3.2 1.7

Advertising Intensity % 1.6 1.4 1.1

Table 3: (Selected) MNE Characteristics

Table 4: Comparison of Profitability and Survival Findings by Location and Cluster

11Vol. 19, no. 3, 2019

Managerial Implications

MNEs seeking access to markets and/or knowledge should establish services subsidiaries in GCs and manufacturing subsidiaries in metrosSubsidiaries established for business development and knowl-edge seeking reasons will benefit from customer proximity and innovation ecosystems. The downtown Houston branch of Ja-pan’s largest bank— Mitsubishi UFJ, is located near the offices of its main customers—Japanese and US energy companies. The Dutch MNE Philips’ North America health technology research center is located in metro Boston. To improve the likelihood of profitability for market/knowledge seeking sub-sidiaries, I recommend locating services subsidiaries in GCs and manufacturing in metros. Knowledge seeking subsidiaries may further benefit from metro locations within diverse CE clusters.

In GCs and metros, average profitability is better, but greater corporate scrutiny and higher expectations may lower survival rates for the weaker to moderate performers. Hence, subsid-iary managers must make the case for greater corporate-level tolerance while the subsidiary establishes itself and overcomes challenges of higher costs and competition.

MNEs seeking efficiency and/or resources should establish subsidiaries outside GCs/metrosLong-term survival may be a more relevant performance mea-sure for efficiency/resource seeking subsidiaries. Such oper-ations are generally capital intensive, requiring stability and sustained cost advantages to generate returns. Large-scale manufacturing and distribution activities will benefit from availability of lower cost factors of production. Toyota’s largest automobile plant is built on 1,300 acres in Georgetown, Ken-tucky. The Belgian steel-maker Arcelor-Mittal’s rural Indiana plant is located near the Morse reservoir, since steel production requires copious amounts of water. CECI clusters may further improve survival prospects in such locations.

Across GCs, metros, and other locations, MNEs should seek to establish subsidiaries within co-ethnic (CE) and co-eth-nic and co-industry (CECI) clustersCE and CECI clusters improve subsidiary profitability in GCs and metros, and CECI clusters enhance survival odds in other locations. Our analysis suggests that a conservative heuristic for (CE or CECI) cluster membership is 10 neighbors within 10 miles.

References

Beaverstock, J. V., Smith, R. G., & Taylor, P. J. 1999. A roster of world cities. Cities, 16(6): 445-458.

Beugelsdijk, S., & Mudambi, R. 2013. MNEs as border-crossing multi-location enterprises: The role of discontinuities in geographic space. Journal of International Business Studies, 44(5): 413-426.

Chacar, A., & Vissa, B. 2005. Are emerging economies less efficient? Performance persistence and the impact of business group affilia-tion. Strategic Management Journal, 26(10): 933-946.

Chang, S.J., & Park, S. 2005. Types of firms generating network exter-nalities and MNCs’ co‐location decisions. Strategic Management Journal, 26(7): 595-615.

Crozet, M., Mayer, T., & Mucchielli, J.L. 2004. How do firms agglom-erate? A study of FDI in France. Regional Science and Urban Economics, 34(1): 27-54.

Goerzen, A., Asmussen, C. G., & Nielsen, B. B. 2013. Global cities and multinational enterprise location strategy. Journal of International Business Studies, 44(5): 427-450.

Kim, T.Y., Delios, A. & Xu, D. 2010. Organizational geography, expe-riential learning and subsidiary exit: Japanese foreign expansions in China, 1979–2001. Journal of Economic Geography, 10(4): 579-597.

Marshall, A. 1920. Principles of economics. London: Macmillan.Sassen, S. 1991. The global city: New York, London, Tokyo. Princeton,

NJ: Princeton University Press.Stallkamp, M., Pinkham, B. C., Schotter, A. P., & Buchel, O. 2018. Core

or periphery? The effects of country-of-origin agglomerations on the within-country expansion of MNEs. Journal of International Business Studies, 49(8): 942-966.

Wagner, D. 2008. Learning from Global Cities, MIT Sloan Management Review, 49(4): 10-11.

Dwarka Chakravarty (dchakravarty@sdsu.edu) is an Assistant Pro-fessor of Strategic Management at the Fowler College of Business, San Diego State University. His research interests include global cities, regional strategy, and emerging market multinationals. Prior to his Ph.D., he received an MBA from the Indian Institute of Management, Bangalore; and worked with KPMG Consulting in the UK; and with Microsoft in India and the Philippines.

12 AIB insights

An important challenge for managers is how to expand a firm’s reach into new markets. Recognizing this major challenge for practitioners, academic researchers have studied the phenom-enon of firm internationalization for more than half a cen-tury. My dissertation makes the case that academic research on internationalization must evolve if it is to remain relevant and useful to practitioners. The internationalization patterns of firms have changed profoundly over the past half century and continue to evolve in response to technological progress (e.g., digitalization) as well as political and economic chang-es (e.g., regional economic integration, the resurgence of pro-tectionism, the rise of emerging markets). To provide effective guidance to practitioners, research must address the realities of internationalization today. To this end, my dissertation aims to provide contemporary perspectives on internationalization, examining three different issues faced by today’s international-izing firms.

First, my dissertation addresses the subnational dimension of internationalization. Firms’ international business strategies are often discussed at the country level, such as which country to invest in, or how to do business in country X. However, provinces, states, and cities within a single country can differ vastly in terms of economic development, infrastructure, and

even culture. This means that managers have to decide not just which country to invest in, but also where within that country they should invest. Understanding subnational differences and choosing the right subnational location is especially important for firms operating in large, emerging markets, such as China, India, and Brazil, where differences between more developed and less developed areas are particularly stark. My research ex-amines the subnational location choices of Japanese firms in China and shows that choosing certain types of subnational locations for their first investment in China can help firms ex-pand more quickly afterwards.

Second, firms must increasingly consider supranational region-al factors in addition to country-level and subnational factors. Regional economic integration (e.g., the European Union, ASEAN, NAFTA/USMCA) encourages firms to serve multiple countries in a region by adopting regional strategies. For many firms, this raises the question whether they should establish regional management centers in key regions to more effectively manage regional operations. This is the focus of the second part of my dissertation, which examines under which conditions firms introduce regional headquarters and so-called regional management mandates.

Third, many of today’s fastest-growing and most innovative firms are so-called digital firms, whose products and services are purely digital. As digital products can be delivered virtu-ally over the internet (for instance through websites and app stores), they can—in principle—be made available globally at very low cost. For this reason, it is often claimed that interna-tionalization is comparatively easy for digital firms and can be

Contemporary Perspectives on Internationalization: Subnational, Regional, DigitalMaximilian StallkampPh.D. awarded by Ivey Business School, Canada (October 2018)

Special Issue on the 2019 Peter J. Buckley and Mark Casson AIB Dissertation Award

BIG Question:How is the internationalization of contemporary firms shaped by (1) subnational/regional factors and (2) by dig-ital business models?

13Vol. 19, no. 3, 2019

achieved through purely virtual channels. However, my disser-tation shows that this view is overly simplistic and may mislead practitioners. I found that digital firms continue to face signif-icant barriers to internationalization and make use of a variety of different operating modes and internationalization strategies to serve foreign markets effectively.

Part 1: Investing in China, but Where in China? The Importance of Sub-national Location Choice in Foreign Markets

When a firm invests in a foreign country, does it matter where in the host country investment is located? Many countries are internally diverse, with substantial variation across cities and regions in terms of economic development, infrastructure, and market-supporting institutions. This challenge has been in-creasingly noted by practitioners (e.g., McKinsey, 2012). It is especially acute for firms operating in (or planning to enter) large emerging markets, where some areas have benefited from sustained economic development while others have been left behind.

Foreign firms investing in emerging markets tend to invest in relatively more developed subnational locations, especially for their first investment in a particular country. I examined over 10,000 foreign direct investments made by Japanese firms in China between 1993 and 2014, and I found that the vast ma-jority was concentrated in major urban areas in a few coastal provinces. This intense clustering was remarkably stable over time, despite various government policies aimed at promoting investment in the country’s interior, and despite rising costs in coastal provinces. Crucially, many Japanese firms invested in close proximity to other Japanese firms, leading to agglomera-tions of Japanese foreign subsidiaries.

I tested empirically whether there was any measurable bene-fit for Japanese firms entering China to locate their first in-vestment in such a Japanese agglomeration. I found that these subnational locations with dense populations of other Japa-nese firms appear to aid new Japanese entrants in expanding more rapidly. Specifically, firms that entered in a subnational agglomeration were significantly faster to establish additional subsidiaries in other parts of China. This supports the view that the presence of “co-ethnic” Japanese networks within these agglomerations can provide new entrants with crucial resourc-es and information that support further expansion in the host market. More generally, my findings suggest that managers should carefully consider where in a host country they invest, as the initial subnational location choice can have important long-term consequences. In doing so, they should consider not just “hard” factors such as physical infrastructure and econom-

ic variables, but also the presence of home-country firms that might provide a useful social support network.

Part 2: When Do Firms Establish Re-gional Headquarters or Other Re-gional Management Centers?

Many multinational enterprises (MNEs) pursue regional strat-egies to capitalize on similarities between multiple countries in a region. For instance, many US-based multinationals have distinct regional strategies for Europe, Latin America, South-east Asia, and other regions. Such regional strategies have be-come increasingly attractive with the formation of regional trade agreements and regional economic blocs (e.g., European Union, ASEAN, NAFTA/USMCA), which promote econom-ic integration within regions. Regional strategies are some-times—but not always—supported by regional management structures, such as regional headquarters. The second part of my dissertation examines under which conditions firms intro-duce such regional management structures.

I developed and tested a theoretical model based on the follow-ing logic. As a firm expands its operations in a host region by establishing multiple foreign subsidiaries, the growing regional subsidiary network creates increasing demands for coordina-tion and information processing on the parent firm. This can overwhelm the information processing capacity of the corpo-rate headquarters, which is also geographically remote from the operations in the host region. To relieve the burden on corporate headquarters, MNEs establish regional management structures to create additional information processing capacity at the regional level. However, this does not necessarily mean that firms with many subsidiaries must establish a traditional regional headquarters (RHQ), i.e., a stand-alone organization-al unit dedicated entirely to regional management functions. As RHQs are perceived as expensive and inflexible, many firms instead rely on regional management mandates (RMMs) as-signed to an existing operating subsidiary in a region (Alfoldi, Clegg & McGaughey, 2012).

I found that MNEs use RHQs and RMMs in different ways. Firms that have large numbers of subsidiaries in a region tend to choose RHQs, whereas a greater dispersion of subsidiaries across many countries in a region is associated with the alloca-tion of RMMs to select operating subsidiaries. While I was not able to compare the relative effectiveness of RHQs and RMMs, my research does suggest that practicing managers differentiate between the two and that a distinct ‘use case’ exists for both RHQs and RMMs.

14 AIB insights

Part 3: How Can Digital Firms Serve Foreign Markets Effectively?

Digitalization—the increasingly pervasive use of advanced dig-ital technologies in business and society—has the potential to transform how firms internationalize. This is particularly the case for so-called digital firms, which produce purely digital products and services. Examples include business services (e.g., Shopify, Twilio), social media (e.g., Facebook, Snap), games and entertainment (e.g., Epic Games, Netflix), or market-place-like platforms that facilitate trade in physical goods and offline services (e.g., Uber, Airbnb, Etsy).

Since digital products and services can be delivered virtually over the internet to users almost anywhere in the world, it is often assumed that internationalization is comparatively easy for digital firms. Digital firms, according to this line of think-ing, can simply make their digital products available globally over the internet, without having to establish factories, sup-ply chains, or other physical facilities abroad (e.g., UNCTAD, 2017). By extension, digital firms are often assumed to be ‘born global’, meaning that they serve worldwide markets from inception (e.g., McKinsey Global Institute, 2016).

The third part of my dissertation questions this common nar-rative of inherently global digital firms that easily serve world-wide audiences through online channels. I studied 17 different digital firms from 3 continents (North America, Europe, and Asia), operating in different industries. Based on interviews with key decisionmakers (founders, CEOs, senior managers) and additional secondary materials, I analyzed (1) the foreign operation modes of digital firms, and (2) the temporal and geo-graphic patterns of their internationalization.

I found that, rather than relying entirely on virtual inter-net-based exports, digital firms use a variety of different modes to serve foreign markets. From a technical perspective, digital products and services can easily be exported through purely virtual channels, such as app stores and websites. However, most firms in my sample found that they still required some sort of physical presence in foreign markets. This is often nec-essary to provide sales, marketing and customer service func-tions, to build relationships with stakeholders, and to resolve unexpected problems on the ground. Moreover, having ‘boots on the ground’ (as one executive put it) was in many cases seen as critical for understanding foreign markets and adapting products to local needs. Not all digital firms need to establish conventional foreign subsidiaries in each foreign market. In-stead, the firms I studied used a mixture of foreign subsidiaries, regional offices, and flexible arrangements based on temporary executive postings and external partners.

Similarly, digital firms are not necessarily ‘born global’. Some of the sample firms did in fact make their product available

globally and gained international users from the outset. How-ever, most pursued more deliberate market entry strategies, releasing their products or services in select markets only. In-terestingly, firms’ early international expansion efforts often targeted proximate countries in their home region, mirroring well-established internationalization patterns observed among conventional firms, albeit at an accelerated pace. I identified several constraints that limit the ability of many digital firms to serve global markets from the start. Among them are the need for local adaptation (e.g., to meet local tastes, preferenc-es, or regulatory requirements) and the need for local-language sales and customer support services. Many digital firms also operate platform business models that require a critical mass of local complementors (e.g., restaurants, drivers, developers) in each foreign market (Stallkamp & Schotter, 2019). These constraints force many digital firms to adopt a more deliberate, country-by-country internationalization strategy.

The high-level conclusion is that digitalization does not elimi-nate the challenges of internationalization, even for firms with purely digital products. Although digital technologies create new ways of engaging with foreign markets, many digital firms still require ‘boots on the ground’ and face limitations in how quickly they can scale internationally. A better understanding of how digital firms internationalize is crucial for entrepre-neurs, executives, and investors in digital firms, as well as for the academics studying them.

Implications and Conclusion

Beyond the implications for academic research discussed in the dissertation, there are several implications for practitioners (managers, entrepreneurs, investors, government officials). In terms of location choice, my findings indicate that a firm’s initial subnational location choice in a host country can have important long-term consequences for the firm’s subsequent expansion in the country. This suggests that executives need to analyze foreign investment location choices at a fine-grained subnational level and take into account potential benefits from locating close to foreign direct investments made by firms from the same home country. Policy makers and government offi-cials seeking to attract foreign investment may want to leverage existing foreign investment from a particular country to attract further investment from that country. My findings on regional management structures suggest that firms with a growing for-eign subsidiary footprint in a specific region should consider different forms of regional management centers. While RHQs and RMMs are to some extent substitutable, RMMs appear to be more suitable for some conditions and RHQs for others. Finally, my research on digital firms shows that the interna-tionalization of these firms is more complex than commonly acknowledged. Rather than assuming that any digital firm can scale globally using only virtual channels, a more realistic un-

15Vol. 19, no. 3, 2019

derstanding of each individual digital firm’s business model is needed. In many cases, some form of physical presence is still required and selective, country-by-country internationaliza-tion strategies are necessary.

This dissertation provides new insights on how firms interna-tionalize in the 21st century. Contemporary internationaliza-tion is about more than just country-level market entry deci-sions, the establishment of overseas manufacturing plants, and cross-border flows of physical goods. Firms operate in a com-plex, multi-layered environment that presents challenges and opportunities at the subnational, country, and regional level, and increasingly also in the digital sphere. The international-ization of firms remains an important and challenging issue for researchers and practitioners alike.1

References

Alfoldi, E. A., Clegg, L. J., & McGaughey, S. L. 2012. Coordination at the edge of the empire: The delegation of headquarters functions through regional management mandates. Journal of International Management, 18(3): 276–292.

McKinsey Global Institute. 2016. Digital globalization: The new era of global flows. http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/digital-globalization-the-new-era-of-global-flows.

McKinsey & Co. 2012. Winning the $30 trillion decathlon. Going for gold in emerging markets. https://www.mckinsey.com/busi-ness-functions/strategy-and-corporate-finance/our-insights/win-ning-the-30-trillion-decathlon-going-for-gold-in-emerging-markets

Schotter, A., Stallkamp, M., & Pinkham, B. 2017. MNE headquarters disaggregation: The formation antecedents of regional manage-ment centers. Journal of Management Studies, 54(8): 1144–1169.

Stallkamp, M., & Schotter, A. P. 2019. Platforms without borders? The international strategies of digital platform firms. Global Strategy Journal. Advance online publication. https://doi.org/10.1002/gsj.1336

Stallkamp, M., Pinkham, B., Schotter, A. & Buchel, O. 2018. Core or periphery? The effects of country-of-origin agglomerations on the within-country expansion of MNEs. Journal of International Busi-ness Studies, 49(8): 942–966.

UNCTAD. 2017. World investment report 2017: Investment and the digital economy. http://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=1782

Endnotes

1 Note: Versions of Essay 1 and Essay 2 have been published as co-authored articles (Stallkamp, Pinkham, Schotter & Buchel, 2018; Schotter, Stallkamp & Pinkham, 2017).

Maximilian Stallkamp (mstallkamp@vt.edu) is an Assistant Professor at Virginia Tech. His research and teaching interests are in international strategy, with a special focus on firms with digital and platform-based business models. Max’s research has been published in the Journal of International Business Studies, the Journal of Management Studies, and the Global Strategy Journal.

16 AIB insights

Introduction

When I started working on my Ph.D. dissertation in the sum-mer of 2013, the Arab Spring, characterized by popular calls for democracy in several countries in the Arab world, had turned into an Arab Winter, characterized by horrific political conflicts. In the years that I developed the papers in my dis-sertation, the conflicts in Syria, Yemen and Libya only intensi-fied. Globally, we have seen a large increase in political conflict from 35 conflicts in 2005 to 50 in 2015.1 This increase can of course be partially explained by the turmoil resulting from the Arab Spring, but conflict also increased in other parts of the word, such as Iraq, Nigeria or Ukraine. Interestingly enough, multinational enterprises (MNEs) do not seem so deterred by conflict and actively invest in conflict countries. Of all subsid-iaries that MNEs opened in low, middle-income economies, 13% were actually in conflict countries, and 5% were even in war countries, defined as conflict countries1 with at least 1,000 battle-related deaths.

The research objective of my dissertation is to shed light on the opportunities for MNEs in conflict regions and to enhance our understanding of the MNE and conflict risk. Although the IB literature has paid considerable attention to MNEs investing in emerging markets and the risks associated with this, there has been somewhat limited attention to the relationship between conflict and MNEs. It has been mainly left to economists and political scientists, with the general idea that there lie very few

opportunities in conflict areas for the private sector and mul-tinationals in particular. However, global competition pushes firms to consider location options with relatively high political risk profiles, including those troubled by conflict and war. Ac-cordingly, a better understanding of how conflict risk affects the operations of MNEs is much needed.

My thesis emphasizes that the assumption that political vi-olence necessarily puts off investors is too simplistic. A con-siderable number of MNEs are attracted to conflict regions, showing that there are opportunities for firms to create and appropriate value whilst facing significant conflict-related risk. I even find that political conflict positively affects greenfield foreign direct investment (FDI) by the most diversified firms, suggesting that entry into conflict countries might allow firms to obtain a first-mover advantage if MNEs are able to absorb discontinuous risk. I also demonstrate that the continuity of the risk is an important factor influencing MNEs’ entry strate-gies, so that exceptionally discontinuous risks, such as the risk of a terrorist attack, are so unpredictable that they do not af-fect FDI decisions. Finally, the findings of my thesis imply that wars can reduce the importance of home-host ties for current investment decisions.

Main Themes: FDI, Political Conflict and Prosperity

Ultimately, my dissertation concerns the relationships between political conflict, FDI and prosperity. In the triangle in Figure 1, the relationships studied are depicted as two solid arrows. The largest part of my thesis is devoted to studying the relation-ship between FDI and violent political conflict. However, to study the factors which determine MNE’s reaction to political

Special Issue on the 2019 Peter J. Buckley and Mark Casson AIB Dissertation Award

Bloody Business: Multinational Investment in an Increasingly Conflict-Afflicted WorldCaroline Theresia WittePh.D. awarded by Erasmus University Rotterdam, The Netherlands (January 2018)

BIG Question:What determines multinational enterprises engagement in conflict countries?

17Vol. 19, no. 3, 2019

conflict, it is necessary to understand how variation in conflict emerges in the first place. Therefore, the first paper of my dis-sertation focuses on explaining conflicts. To test both the effect of prosperity on conflict and the effect of conflict on FDI, I em-ploy a variety of regression techniques on large panel datasets.

Political Conflict Political conflict (Figure 1, top box) has two components. Whereas violent conflict, most notably civil war and to a lesser extent international conflicts, might be the most salient types of political conflict, in my dissertation, I also pay attention to civil resistance, the non-violent counterpart of armed conflict. Recently, we have seen that this type of conflict often leads to violent conflict (e.g., the Arab Spring in Syria) and can have large consequences for multinational enterprises (e.g., the an-ti-government protests in Hong Kong).

Foreign Direct InvestmentIn terms of FDI (Figure 1, bottom left), I move beyond wheth-er FDI flows are overall affected by political conflict and fo-cus on different sources of heterogeneity that affect how FDI flows react to political conflict. These sources of heterogeneity include sector, firm and home country characteristics. Accord-ingly, I improve the understanding of the mechanisms that affect MNEs’ investment opportunities in conflict-afflicted countries.

ProsperityThe final concept in the triangle is prosperity (Figure 1, bottom right), which focuses on healthy societies and thriving citizens. Whereas prosperity is often seen as a synonym for economic development, I am particularly concerned with the relation-ship with subjective wellbeing. This is particularly relevant in contexts where objective measures of development, like GDP

growth and poverty measures, do not necessarily translate to an increase in life satisfaction. For example, in the period preced-ing the Arab Spring, many Arab countries, especially the ones where the uprisings were most intense, experienced a phenom-enon called ‘unhappy development’, where rising income levels were accompanied by decreasing subjective wellbeing (Aram-patzi et al., 2018).

Main Findings and ResultsUnhappy Rebels: The Role of Subjective Wellbeing in Civil UprisingThis paper examines the antecedents of political conflict and is directly born out of my frustration with existing models of political conflict. These existing models tend to focus on objec-tive factors such as GDP growth and ethnolinguistic fractual-

ization, whilst these factors are unable to predict or explain the Arab Spring or some of the other recent conflicts. In the ‘unhap-py rebels’ chapter, I ask whether wellbeing data can explain variation in non-violent conflict events. Particularly, I look at the number of anti-government protests and strikes around the globe. This type of con-flict is prevalent around the world. Take for example, the protests at the beginning of the Arab Spring or those that preceded the violent conflict in Ukraine. The focus on subjective indicators is warranted by an increased discrepancy between develop-ments in objective and subjective indica-tors. For example, whilst in most of parts of the Arab world income was growing, subjective wellbeing measures indicated a decrease in satisfaction with living stan-dards.

My findings demonstrate that a decrease in subjective wellbeing can motivate citizens to engage in acts of civil resistance. This effect is largely the result of changes in sat-isfaction with living standards and the perceived capability to have a purposeful and meaningful life. These findings support the view that economic grievances can lead to peaceful upris-ings. However, I find no effect of subjective wellbeing on vio-lent political conflicts, which suggests that other factors such as the resources of rebels or the military power of the government play a more important role here.

Dodging Bullets: The Heterogeneous Effect of Political Vi-olence on Greenfield FDIIn this chapter, I study the variation in how MNEs adjust their FDI in response to political violence. I argue that you would expect a negative effect for political conflict rather than for other types of political violence such as assassinations, political terror or terrorism. Political conflict has a higher impact on the

Political Conflict

Violent conflict (e.g., civil war & in-ternational conflicts)

Non-violent conflict (e.g., civil resistance)

Foreign Direct Investment (FDI)

• Sector heterogeneity• Firm level heterogeneity•Home country heterogeneity

Prosperity• Economic development• Subjective wellbeing

2 3 1

Figure 1. Illustration of the hypothesized political conflict, FDI and prosperity triangle

Note: The solid lines represent the relations studied in this dissertation, while the dashed lines correspond to relations established in the literature. The numbers indicate the papers of

the dissertation in which the relationship is discussed.

18 AIB insights

operations of firms than political terror or assassinations (see Figure 2). In addition, it poses a more continuous risk than ter-rorism, meaning that it is relatively foreseeable and hence more likely to affect strategic decision-making. Hence, I argue that the average multinational will shy away from areas troubled by violent political conflict. However, a considerable number of MNEs invest in conflict countries anyways.

To study why firms invest in these conflict countries, I analyze the relationship between greenfield FDI flows and conflict for 90 developing countries over the period 2003 to 2012. I find that nationwide political conflict is negatively associated with total greenfield FDI, but this relationship is completely driven

by decreased FDI flows into non-resource industries. In other words, whereas multinationals in the service and manufacturing industry decrease their investments in the case of conflict, I do not find any evidence that resource-related greenfield FDI de-creases. Studying the mechanisms that could explain the insen-sitivity of resource FDI to political conflict, I find that this effect can largely be explained by the high profitability of natural re-source extraction and geographic constraints on location choice.

In the non-resource sector, the least geographically diversi-fied firms are most sensitive to conflict. Large MNEs active in many different countries are on the other hand not sensitive to political conflict. I find evidence that MNEs that are suffi-ciently internationalized are even attracted to conflict regions. This suggests that firms that enter into conflict countries might even increase earnings if MNEs are able to absorb discontin-uous risk. As such, MNEs might want to consider entry into conflict countries – taking into account sector and firm attri-butes, despite the large level of risk posed, with the intention of obtaining a competitive advantage. Finally, other types of political violence, including intermittent violence in the form of terrorist acts and assassinations, or persistent but low-impact events, such as political terror, have no effect on the location choice decisions of multinational enterprises.

When Political Instability Destroys Historical TiesWhile in the second paper, I look at the role of firm and sector

level heterogeneity in the relationship between political con-flict and FDI, in the third paper I turn to heterogeneity at the level of the MNE’s home country. Whereas the effect of inter-national wars on home-host ties is relatively well understood, this paper demonstrates how internal conflict – currently the dominant form of armed conflict– affects these relationships. Particularly, I look at the importance of previous colonial ties. It is well known that these ties can benefit firms from previ-ous colonizer countries in a previous colony. In this paper, I ask: how is the value of home-host ties contingent on political conflict and instability? On the one hand, firms from previous colonizers might be better able to profit from the uncertain-ty and transparency than firms from countries without these

ties. On the other hand, wars also pose a threat to their advantage, because the value of their relational resources could diminish quickly when conflict leads to institutional changes. I hypothesize that by increasing the risk within the institutional structure, small political conflict positively moderates the re-lationship between home-host ties and loca-tion attractiveness, whereas full-fledged wars and regime transitions, in which risk to the institutional structure dominates, erode the value of ties.

Examining location choice decisions in Sub-Saharan Africa, I find evidence that wars

and institutional transitions indeed devaluate home-host ties, whereas small political conflict does not affect the value of ties. These results do not support the idea that connected firms can benefit more from the confusion caused by political conflict. In contrast, they seem to have more to lose and accordingly face considerable incentives to avoid the outbreak of wars.

Contributions and Implications for Practitioners

Political conflict has become more prevalent in the last decades and with the consequences of global warming becoming more pronounced, the prospects of world peace are merely declin-ing. My dissertation contributes to the existing literature on MNEs in developing countries by increasing our understand-ing of conflict risk for the MNE. A better understanding of the consequences of conflict helps firms prepare for conflict-related risks, possibly reducing the overall economic impact of con-flict. My thesis’ main contribution relates to the unpacking of conflict-related risks, and accordingly, this dissertation facili-tates a better understanding of the interaction between risk and firm characteristics. I demonstrate that the continuity of the risk is an important factor influencing MNEs’ entry strategies,

Type of impact Level of impact

Type of risk Low High

Continuity

Discontinuous/

Intermittent

Assassinations Terrorism

Continuous Political Terror Political conflict (e.g., civil conflict or interstate war)

Figure 2. Different types of political violence, organized by level of impact and continuity

19Vol. 19, no. 3, 2019

so that exceptionally discontinuous risks, such as the risk of a terrorist attack, are so unpredictable that they do not affect FDI decisions. Yet, MNEs tend to avoid countries that are af-flicted by armed conflict, a type of political violence that poses a relatively continuous type of risk and can have a large nega-tive impact on a firm’s profits.

I empirically show that whilst on average political violence that poses a discontinuous risk (e.g., terrorism) or has a low impact on the multinationals’ operations (political terror) does not af-fect greenfield investments, political conflict is detrimental to MNEs. This is not surprising, because conflicts decrease the profitability of subsidiaries due to supply chain disruption and the risk of capital destruction. The average MNE might accord-ingly consider implementing strategies to minimize the proba-bility of conflict. Although MNEs are unlikely to have a major influence on the outbreak of conflicts, they can nevertheless engage in voluntary actions that might decrease human suffer-ing and could accordingly decrease conflict. Examples of such actions are providing adequate schooling and supporting small business development through skill trainings and microfinance.

Yet, the relationship between political conflict and FDI is het-erogeneous. Several factors determine the sensitivity of FDI to political conflict, most notably:

1. The international profile of the MNE2. Sector level economic rents and constraints on location

choice3. The MNE’s geographic exposure to violence4. The existence of home-host ties

Accordingly, my results emphasize that the assumption that political conflict necessarily depresses earnings and puts off in-vestors is too simplistic. A considerable number of MNEs are attracted to conflict regions, showing that there are opportuni-ties for firms to create and appropriate value whilst facing sig-nificant conflict-related risk. The finding that political conflict positively affects greenfield FDI by the most diversified firms, suggests that entry into conflict countries might even create strategic opportunities if MNEs are able to absorb discontin-uous risk.

The findings in my thesis also imply that wars can reduce the importance of home-host ties for current investment decisions. These ties remain conducive to business dealings, but wars and institutional transitions can reduce the advantage that MNEs from countries with these ties have. This creates two separate sets of incentives for connected and unconnected MNEs. Con-nected MNEs are likely to benefit from the strengthening of a host government’s state capacity and particularly from an increase in military power. A strong state could deter rebel-lion, whilst also decreasing the probability that insurgents win a conflict. MNEs could enhance host countries’ state capacity

by providing intelligence and financial resources, which can be employed to enhance military capacity. In addition, con-nected MNEs can lobby their home country governments into providing military support to the host country’s government, which could deter insurgents. In contrast, unconnected MNEs might in the long run benefit from war and instability, because this could reduce the advantage of firms originating from a country with a tie to the host. By entering a country that is likely to go through an institutional transition in the near fu-ture and partnering up with the opposition party, MNEs can create a considerable political first-mover advantage.

Regarding economic and business policy, more attention should be given to the role of economic grievances that are subjective in nature. Here the case of ‘unhappy development’ merits spe-cial attention. Countries experiencing ‘unhappy development’ prosper in terms of objective indicators of development, but suffer in terms of subjective wellbeing. The Arab Spring was preceded by a period of such unhappy development. Hence, economic policies, such as trade agreements and corporate tax incentives, should not only be evaluated in terms of objective economic outcomes, but also in terms of their effect on sub-jective wellbeing. This also implies that there are opportuni-ties for international business policy research to uncover how MNEs actually affect subjective wellbeing, including individu-als’ perceptions that they have the freedom to make something of their lives.

References

Arampatzi, E., Burger, M. J., Ianchovichina, E., Röhricht, T., & Veen-hoven, R. 2018. Unhappy development: Dissatisfaction with Life on the Eve of the Arab Spring. Review of Income and Wealth, 64(S1): 80-113.

Pettersson, T., & Wallensteen, P. 2015. Armed conflicts, 1946–2014. Journal of Peace Research, 52(4): 536-550.

Endnotes

1 Political conflict is defined as a contested incompatibility that concerns government and/or territory where the use of armed force between two parties, of which at least one is the government of a state, results in at least 25 battle-related deaths in one calendar year (Pettersson & Wallensteen, 2015).

Caroline Witte (cwi.smg@cbs.dk) is an assistant professor of strategy and international management at the Department of Strategy and Innovation, Copenhagen Business School. She is mainly interested in strategic management in fragile economies. Caroline has a PhD from the Erasmus University Rotterdam and a MSc. in Economics and Business from the same institute. Caroline has also worked as an external consultant for the World Bank’s Chief Economist Office for the Middle East & North Africa.

20 AIB insights

Previous AIB Dissertation Award Winners2018: Luis Ballesteros (Ph.D. awarded by The

Wharton School, University of Pennsylvania)

2017: Neli Kouneva Loewenthal (Ph.D. awarded by George Washington University)

2016: Anne Jacqueminet (Ph.D. awarded by HEC Paris)

2015: Michael A. Sartor (Ph.D. awarded by West-ern University)

2014: Marcus M. Larsen (Ph.D. awarded by Co-penhagen Business School)

2013: Lite J. Nartey (Ph.D. awarded by The Whar-ton School, University of Pennsylvania)

2012: Marc van Essen (Ph.D. awarded by Erasmus University)

2011: Prithwiraj Choudhury (Ph.D. awarded by Harvard Business School)

2010: Jesper Edman (Ph.D. awarded by Stockholm School of Economics)

2009: Daniel Rottig (Ph.D. awarded by Florida Atlantic University)

2008: Ajai Gaur (Ph.D. awarded by National Uni-versity of Singapore)

2007: Rekha Krishnan (Ph.D. awarded by Tilburg University)

2006: Jon Erland Lervik (Ph.D. awarded by Nor-wegian School of Management)

2005: Renata Kosova (Ph.D. awarded by University of Michigan)

2004: Cyril Bouquet (Ph.D. awarded by University of Western Ontario)

2003: Camilla A. Noonan (Ph.D. awarded by Uni-versity of Reading)

2002: Jeffrey E. Johnson (Ph.D. awarded by Uni-versity of Strathclyde)

2001: Heather Berry (Ph.D. awarded by University of California, Los Angeles)

2000: Joan P. Mileski (Ph.D. awarded by University of Texas at Dallas)

1999: Witold Henisz (Ph.D. awarded by University of California, Berkeley)

1998: Lena Zander (Ph.D. awarded by Uppsala University)

1997: Tatiana Kostova (Ph.D. awarded by Univer-sity of Minnesota)

1996: Xavier Martin (Ph.D. awarded by University of Michigan)

1995: Subramanian Rangan (Ph.D. awarded by Harvard University)

1994: Patricia Robinson (Ph.D. awarded by Massa-chusetts Institute of Technology)

1993: Scott Xianfang Liu (Ph.D. awarded by Penn-sylvania State University)

1992: Srilata Zaheer (Ph.D. awarded by Massachu-setts Institute of Technology)

1991: Eugene Salorio (Ph.D. awarded by Harvard University)

1990: Arvind Parkhe (Ph.D. awarded by Temple University)

1989: Paz Estrella e Tolentino (Ph.D. awarded by University of Reading)

1988: Ching-Sung Wu (Ph.D. awarded by Univer-sity of California, Los Angeles)

1987: Fritz Rieger (Ph.D. awarded by McGill Uni-versity)

1986: Kwang Chul Lee (Ph.D. awarded by Univer-sity of South Carolina)

1985*: L. Jeremy Clegg (Ph.D. awarded by Univer-sity of Reading)

21Vol. 19, no. 3, 2019

1985*: Leo Sleuwaegen (Ph.D. awarded by Catholic University of Leuven)

1984: John J. Dugan, Jr. (Ph.D. awarded by Tem-ple University)

1983: Kate Gillespie (Ph.D. awarded by University of London)

1982*: Erdogan Bilik (Ph.D. awarded by Ohio State University)

1982*: Douglas W. Nigh (Ph.D. awarded by Uni-versity of California, Los Angeles)

1981: Viem Kwok (Ph.D. awarded by University of California, Berkeley)

1980: William H. Davidson (Ph.D. awarded by Harvard University)

1979: Sarkis J. Khoury (Ph.D. awarded by Univer-sity of Pennsylvania)

1978*: Michael A. Amsalem (Ph.D. awarded by Harvard University)

1978*: Ruediger Neumann-Etienne (Ph.D. awarded by University of Michigan)

1977: Robert D. Tamilia (Ph.D. awarded by Ohio State University)

1976: Gerard B. J. Bomers (Ph.D. awarded by University of Washington)

1975: Ah B. Sim (Ph.D. awarded by University of California, Los Angeles)

1974: Edward B. Flowers (Ph.D. awarded by Geor-gia State University)

1973*: Lee H. Radebaugh (Ph.D. awarded by Indi-ana University)

1973*: Claude L. Simpson (Ph.D. awarded by Georgia State University)

1973*: Arnold K. Weinstein (Ph.D. awarded by Columbia University)

1972: James J. Ward (Ph.D. awarded by George Washington University)

1971: Jeffrey S. Arpan (Ph.D. awarded by Indiana University)

1970: José R. de la Torre (Ph.D. awarded by Har-vard University)

1969: John D. Daniels (Ph.D. awarded by Univer-sity of Michigan)

1968: James W.C. Tomlinson (Ph.D. awarded by Massachusetts Institute of Technology)

* In the years of 1973, 1978, 1982 and 1985, ties resulted in several award winners.

22 AIB insights

Call for Papers: AIB Insights Special Issue “Responsibilities of Educators in International Business”

Guest Editors:

Allan Bird and Daria Panina

AIB Insights Associate Editor: William Newburry Introduction

At a time when international business scholars have called on executives and managers to place greater attention on corporate social responsibility in order to address issues of inequality, diversity, inclusion, and sustainability, in line with Rasche and Gilbert’s (2015) broader call, it is appropriate for the academic community to turn its attention inward and address the issue of responsibility in international business education. Given the expansion of IB educational activities through increasing coverage of relevant topics in functional courses, what is the role of IB education in shaping the mindsets and values of the business leaders of tomorrow? What is the unique contribution of IB courses to transforming business students into citizens of the world? In short, what responsibility do international business educators have and what do they aspire to achieve as educators?

Several aspects of IB education raise distinctive issues when addressing matters related to educator responsibility. It is not uncommon, for instance, for educators to seek not just education, but transformation. This has given rise to increasing use of experiential learning approaches (Taras & Gonzales-Perez, 2015), particularly in cross-cultural management courses. In 2014, AIB Insights (Maznevski, 2014; Peterson, 2014) dedicated an issue to one instance of an experiential activity that went terribly wrong, thereby plunging students, the instructor, and the institution into turmoil. What responsibility do instructors and institutions have in the selection and implementation of different pedagogies? To what extent do IB educators consider the impact their instructional decisions may have on their students, institutions of higher education, and the world?

In a similar vein, in a time of instability in sociopolitical and economic structures on the global level (Meyer, 2017) – amid calls for de-globalization and appeals to reconsider capitalism – what role does IB education play in promoting and maintaining civility and rationality in the broader public square?

In this AIB Insights Special Issue, we seek to further flesh out the contours of responsible IB education and promote a dialogue about enhancing the quality of IB education through an acceptance of greater accountability. Example Topics

While we are broadly interested in any topic related to the Special Issue theme that encourages a discussion of the responsibilities of IB educators, some potential topics for the special issue are listed below.

• What is different about teaching IB from teaching in other disciplines (e.g., management, finance)? • What ethical considerations and concerns underlie the teaching of IB? • What are the responsibilities of educators in the IB field to stakeholders (i.e., students, sponsoring institutions,

employers, societies)? • How do these responsibilities vary based on:

o Location (e.g., within country or outside)? o Timeframe (e.g., before, during or after international experience)? o Student demographics (e.g., age, gender, domestic versus international)?

• How do we ensure that IB education provides the transformational process that we aim for, and what responsibilities do educators have in designing and overseeing this process?

• What are the ethical issues associated with IB education? • How does viewing IB education as a calling impact perceptions of responsibility? • What is the role of IB education in a time of calls for de-globalization? • What responsibility do educators have when selecting and implementing different pedagogy?

23Vol. 19, no. 3, 2019

Submission Process and Timeline

AIB Insights is the Academy of International Business official publication that provides an outlet for short (around 2500 words), interesting, topical, current and thought-provoking articles. Colleagues interested in submitting their work to this Special Issue should consult the AIB Insights Editorial Policy and use the Online Manuscript Submission System, both of which can be accessed via the AIB Insights website at https://aib.msu.edu/publications/insights. Please select “Special Issue: IB Education” under ‘Track’ when submitting your manuscript. Timeline: Please submit your work on or before October 31, 2019. Expected publication of this Special Issue is in the first half of 2020. References Maznevski, M. (2014). Managing Deep Intercultural Training Exercises. AIB Insights, 14(2), 7. Meyer, K. E. (2017). International business in an era of anti-globalization. Multinational Business Review, 25(2), 78-90. Peterson, M. F. (2014). Stepping on cultural and religious assumptions. AIB Insights, 14(2), 4. Rasche, A., & Gilbert, D. U. (2015). Decoupling responsible management education: Why business schools may not walk

their talk. Journal of Management Inquiry, 24(3), 239-252. Taras, V., & Gonzalez-Perez, M. A. (Eds.). (2015). The Palgrave handbook of experiential learning in international

business. Palgrave Macmillan.

For Submissions, Ideas And Questions, Please Contact: insights@aib.msu.edu AIB Insights (ISSN: print: 1938-9590; online: 1938-9604) provides an outlet for short, topical, stimulating,

and provocative articles. Past copies of AIB Insights can be accessed through the AIB website at http://aib.msu.edu/publications/insights

AIB Insights Editorial Team

John Mezias, Editor William Newburry, Associate Editor

Anne Hoekman, Managing Editor Chei Hwee Chua, Communications Officer

24 AIB insights

Editorial PolicyAIB Insights is the Academy of International Business official publication that provides an outlet for short (around 2,500 words), interesting, topical, current and thought-provoking articles.

Articles can discuss theoretical, empirical, practical, or peda-gogical issues affecting the international business community. The publication seeks articles that have an international busi-ness and cross-disciplinary orientation with IB researchers and faculty as the intended primary audience.

Authors should highlight the insight of their article in the first paragraph. They should prompt the reader to think about international business and international business teaching/learning in new ways. Articles sought should be grounded in research, but presented in a readable and accessible format.

Articles written for AIB Insights should be free of professional jargon and technical terms, light on references, but heavy on insight from the authors’ experiences and research. Termi-nology should be defined if it is not in the common domain of the IB literature. Authors should remember the intended audience of the publication and write accordingly. A regres-sion equation, a correlation matrix, a table or a graph needed to support a point may be included.

AIB Insights does not seek the kind of articles that are intend-ed for traditional journals in international business, such as

the Journal of International Business Studies. The publication is intended to inform, educate, and enlighten readers with state of the art information on a topic with a broad appeal to the profession. Acceptable articles may fall into one of several categories:

1. Research insights from authors’ stream of research2. Current issues affecting international business as

a discipline3. The use of technology in international business4. The evolving nature and evolution of the International

Business department/function/discipline5. Internationalization of the curriculum6. Innovative approaches to teaching international

business7. Teaching pedagogy and content articles8. Other topics of interest

Please include a cover page with all the authors’ contact details (email, university affiliation, full address, telephone, fax if used). The second page should include 50-75 word biographies of participating authors. Articles submitted should follow JIBS referencing style for consistency. AIB Insights is published four times a year and available in print and digital format. Please submit your manuscript via our online manuscript submission system at aib.msu.edu/ publications/insights. For any questions, please contact the AIB Insights editorial team via email at insights@aib.msu.edu.

AIB Insights (ISSN: print 1938-9590; online: 1938-9604) is an official AIB publication and provides an outlet for short, topical, stimulating, and provocative articles. Past issues of AIB Insights can be accessed at aib.msu.edu/publications/insights.

AIB Insights is jointly published with the AIB Newsletter by the Academy of International Business Secretariat. For more information, contact the AIB Media and Communications Coordinator at:

Academy of International BusinessMichigan State UniversityEppley Center645 N Shaw Ln, Rm 7East Lansing, MI 48824 USATel: +1-517-432-1452Fax: +1-517-432-1009Email: media@aib.msu.edu

AIB Insights Editorial Team

John Mezias, Ph.D., EditorUniversity of Miami, USA

William Newburry, Ph.D., Associate EditorFlorida International University, USA

Chei Hwee Chua, Communications DirectorUniversity of Miami, USA

Anne Hoekman, Managing EditorMichigan State University, USA

Copyright © 2019 Academy of International Business

Past Editors:Daniel Rottig, Editor (2016-18) &

Associate Editor (2013-15)Romie Littrell, Editor (2013-15)

Ilan Alon, Editor (2009-12)Tamir Agmon, Editor (2004-08)

Betty Jane Punnett, Founding Editor (2001-03)

Submit your manuscript at aib.msu.edu/publications/insights