We investigate how informal social networks can assist multinational firms in their internationalization strategy. We propose a refinement of the Uppsala internalization model (Johanson & Vahne, 2009) grounded in network theory, by developing an intermediate position between an ‘insider’ and an ‘outsider’ for conditions when the transformation of an outsider into an insider is limited by institutional constraints. An intermediary position represents one of the sides of ‘patron-client’ informal networks (Denoeux, 1993) whereby the other side is represented by the ‘insider’. We argue that this setup would help mitigate the Liability of Outsidership (Johanson & Vahne, 2009), a replacement of the Liability of Foreignness (Hymer, 1976; Zaheer, 1995), in the modern networked business world. We contextualize our proposition for the case of Iran, a large rising West-Asian economy with known institutional limitations, and suggest that the informal network of local merchants (bazaaries) could play an important intermediary role in Multinational Enterprises (MNEs) internationalization process. We review the history of bazaaries and make a series of propositions exemplifying possible ways informal networks could influence the internationalization process. In addition to re-affirming the importance of the MNE country of origin (emerging markets, and low psychic distance with Iran), we propose that an intermediary of the Iranian bazaaries will have a positive impact on performance and survival of the MNE's subsidiary in Iran, especially in the case of incongruence of MNE's leadership with Shi'a Islam. Additionally, we suggest that employing the Iranian diaspora may also improve subsidiary performance and survival.

Previous research has debated whether guanxi persists or declines with the development of formal institutions. This study addresses this debate by investigating how the development of formal institutions in China's state-owned organizations influences employees’ guanxi behavior. Building on institutional logics theory, I propose that guanxi behavior is a reaction to the socialist institutions adopted by state-owned enterprises (SOEs) and is associated with the collective identity of SOEs. Thus, employees’ identification with SOEs is the mechanism that influences their guanxi behavior. A survey of 721 employees from 12 organizations compared guanxi behavior across three types of organizations with different degrees of state ownership: SOEs, public firms, and joint ventures. The results showed that the employees of joint ventures identify less with SOEs and engage in less guanxi behaviors than do SOE employees. The employees of public firms still identify with SOEs, and their guanxi behavior did not differ from that of SOE employees. Identification with SOEs mediated the effect of organizational type on guanxi behavior, whereas formalization did not. Therefore, the development of formal institutions does not necessarily decrease guanxi behavior, and its effect depends on whether the collective identity underlying guanxi is changed. This study has important implications for guanxi research, institutional logics theory, and transition economies.

Pursuing an international career in China can be risky particularly when there is a lack of informal relationships and knowledge of the socio-cultural environment of the country. Drawing from social capital theory of career success and intelligence theory, this study investigates the influence of expatriate manager-local subordinate guanxi on expatriate managers’ career performance and the contingency role of cultural intelligence. Using multi-source data from a sample (N = 154) of expatriate managers in China, our results show that expatriate manager-local subordinate guanxi positively influences expatriate career performance, and that this relationship is positively moderated by expatriates’ cultural intelligence. The broader theoretical and practical implications of the findings for international careers are fully discussed.

On the basis of a rich panel data set of large- and medium-sized Chinese manufacturing enterprises, we observe that different types of firms (i.e., state-owned enterprises [SOEs], foreign-funded ownership [FFO] of firms, Hong Kong-Macau-Taiwanese [HMT] companies and privately-owned firms) exploit different stages of the innovation – productivity chain depending on the extent of market concentration. By applying a modified CDM model, this study reveals that SOEs tend to be more active in making innovative decisions and pursuing innovative investments but are less efficient in terms of innovation output and labour productivity, whereas FFO firms have relatively high labour productivity but are less active in the first three stages of the innovation – productivity chain. Market competition favours SOEs in the production of additional innovation products. Foreign firms are efficient in labour productivity if they are operating in a concentrated market. By using the metaphor of DNA, this study explains the heterogeneity among these different forms of ownership and generates several managerial implications.

Drawing on the job-demand resource theory, the article examines the relative importance and the complementarity of three widely practiced leadership styles – transformational, paternalistic, and authoritarian. It investigates how the three styles relate to followers’ work engagement amongst employees in Russian domestic organizations. It also theorizes and tests the mediating effects of three psychological mechanisms, namely self-efficacy, self-esteem, and job control, on the examined relationships. The findings show that all three leadership styles relate to followers’ work engagement positively. The relationship of transformational leadership is dominant and mediated by all three psychological mechanisms. The remaining two styles also make their unique contributions to followers’ work engagement. Whereas authoritarian leadership influences followers by enhancing their self-efficacy and self-esteem, paternalistic leadership operates more extrinsically by increasing followers’ job control. Surprisingly, our analyses found that the role of control variables such as gender, age, and hierarchical position were insignificant in predicting how the three leadership styles influence employee work engagement. The study is among the first to shed light on the relative importance of the three focal leadership styles, their differential influences and interrelations, and the different mechanisms through which they relate to followers’ work engagement.

Extant literature focuses on within-dyad opportunism (i.e., transgression of the norms of a specific business relationship) while neglecting pro-relational opportunism (i.e., transgression of societal norms to benefit the relationship), resulting in limited understanding of their different effects. We argue that opportunism is a significant threat to the identity of business partners and boundary spanners which results in different relational dynamics at different levels, that is, Type-I (i.e., interorganizational identification squeezing out interpersonal identification) and Type-II identification asymmetry (i.e., interpersonal identification dominating interorganizational identification). Identification asymmetry further mediates the effects of opportunism on exchange performance. Based on a matched manufacturer–supplier sample, we find strong support to the hypotheses. Moreover, distributive fairness aggravates the effect of pro-relational opportunism on identification asymmetry, while interactive fairness mitigates it. Our research provides more nuanced between-level findings on identification in interorganizational settings, and cautions against firms’ tendency toward Machiavellian reasoning when they face the temptation of complicit behavior for organizational gains.

We study firm level antecedents that drive different motives of internationalization of emerging economy firms. Based on firm's resource based considerations of asset exploitation versus asset augmentation and locational advantages of host countries, we provide a framework to classify the motives of internationalization of emerging economy firms belonging to knowledge intensive industries. Motives of internationalization have been classified into three broad categories – market-seeking, opportunity-seeking, and strategic asset-seeking. We determine motives behind different modes of internationalization – alliances, acquisitions, and greenfield ventures. Drawing upon the adaptability, amalgamation, and ambidexterity (AAA) advantages from the springboard perspective, we find that firm characteristics like R&D investments, availability of financial slack, firm's ownership structure, and family control shape up its motive of internationalization.

Universities in China have increased their entrepreneurship significantly, yet a good understanding of the specific characteristics of university-based technology transfers remains missing. This study focuses on a special type of university spinoffs in China, University-Run Enterprises (UREs), and examines how URE eminence contributes to a university's technology transfer performance, using panel data covering 195 universities over the five years from 2002 to 2006. The findings reveal that URE eminence not only signifies a university's strong entrepreneurial culture, but also signals commercial values and quality of the university research. It moderates the contribution of university scientists from the supply side and that of sourcing firms from the demand side.

There is still an ongoing debate regarding the firm performance implications of pay gaps between top executives and subordinate employees. This study integrates relative deprivation theory and tournament theory to investigate the potential nonlinear effects of pay gaps. We expect that at low levels of pay inequality, increased inequality hurts firm productivity, while at higher levels of pay inequality, increased inequality helps firm productivity. Our study of Chinese firms confirms that pay gaps have an approximately U-shaped relationship with firm performance. This nonlinear relationship is weaker in state-owned enterprises (SOEs) than in non-SOEs, suggesting that state ownership is an important moderator in the association. Overall, this study explains previous mixed findings regarding consequences of pay gaps with meaningful implications for policymakers and entrepreneurs in China and other economies with similar cultural and institutional backgrounds.

The uncertainty and information asymmetry that surround initial public offering firms (IPOs) often introduce difficulties for potential investors to discern organizational value, thereby leading to ‘underpricing’. Using the signaling theory, we investigate the role of organizational reputation in the underpricing of IPOs. We analyze 463 initial public offerings in China from the period of 2010 to 2016 and find that being known for quality and generalized favorability dimensions of reputation are negatively related with underpricing on the first day of trading. In addition, we find that the negative effects of organizational reputation on underpricing are mediated by investor attention.

In this study, we argue that foreign subsidiaries may benefit from the corporate strategies of multinational enterprises (MNEs) in different ways in terms of knowledge transfer and strategic flexibility. From this viewpoint, we explore the relationship between product diversification and financial performance of their subsidiaries under the condition of MNE geographic diversification. Using panel data on foreign subsidiaries in European countries from 2006 to 2011, we find a U-shaped relationship between product diversification and subsidiary performance and the joint effect of product and geographic diversification. Given the importance of transition economies in international business today, we conducted a subsample test contrasting the results based on the transitional (Central and Eastern European) versus Western European countries. The contrasting results provide important implications for other transition economies like China. We validate the relationship in several ways in our robustness tests.