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• Cover
• Half-Title Page
• Endorsement Page
• Title Page
• Copyright Page
• Dedication
• Contents
• List of Exhibits
• 1 International Business in an Age of Globalization
• Opening Case: The Coca-Cola Company
• An Age of Globalization
• What Does Globalization Mean to You?
• The Face of Globalization
• Who Benefits from Globalization?
• The Impact of Globalization
• Globalization in Transition
• Globalization and International Business
• What is International Business?
• International versus Domestic Business
• Industry/Country Box: Sinostone Comes to Elberton
• Why Expand Internationally?
• The Structure of this Book
• Pedagogical Thrust
• Notes
• I Concepts and Theories in International Business
• 2 International Trade Theory and Application
• Opening Case: Banana Wars
• International Trade Theories
• The Mercantilist Doctrine
• Absolute Advantage Theory
• Comparative Advantage Theory
• Heckscher-Ohlin Theorem
• The Leontief Paradox
• Human Skills and Technology-Based Views
• The Product Life-Cycle Model
• Infant Industry Argument
• Linder’s Income-Preference Similarity Theory
• The New Trade Theory
• Industry Box: The Global Automotive Industry
• Theory Assessment
• International Trade Patterns
• International Trade Volume and Growth
• Service Trade
• Trade Measurement
• Major Exporters and Importers
• US Trade Partners
• Trade Balance
• Arguments for Trade Restrictions
• The Sovereignty Argument
• The Lowest Common Denominator Argument
• Trade Reciprocity and Retaliation against Unfair Trade Practices
• Optimal Tariff Theory
• Types of Trade Barriers
• Tariff Barriers
• Dumping and Anti-Dumping
• Non-Tariff Barriers
• Quotas
• Production Subsidies
• Emergency Import Protection
• Export Controls
• Embargoes and Boycotts
• Administrative Barriers
• Technical Standards
• Country Box: US Trade Policies under the Trump Administration and Trade War with China
• Anti-Globalization Backlash and Intensification of Trade Conflicts
• Notes
• 3 Foreign Direct Investment Theory and Application
• Opening Case: Japan Changes its Mind about FDI, But Needs to do More to Attract It
• Definition and Types of Foreign Direct Investment
• FDI versus Foreign Portfolio Investment
• Types of FDI
• Entry Mode
• The Strategic Logic of FDI
• How the MNE Benefits from Foreign Direct Investment
• Enhancing Efficiency from Location Advantages
• Improving Performance from Structural Discrepancies
• Increasing Return from Ownership Advantages
• Ensuring Growth from Organizational Learning
• The Impact of FDI on the Host (Destination) and Home (Origin) Countries
• Employment
• FDI Impact on Domestic Enterprises in the Host Country
• Current Theories on FDI
• Product Life-Cycle Theory
• Monopolistic Advantage Theory
• Internalization Theory and other Transaction Cost-Based Theories
• The Eclectic Paradigm
• Learning and Capability-Based Perspectives
• The Dynamic Capability Perspective
• The Evolutionary Perspective
• Industry Box: MNEs and FDI in the Automotive Industry
• The Real Option Perspective
• The Integration-Responsiveness Perspective
• Patterns of FDI
• Outward FDI
• Inward FDI
• FDI Entry Forms
• The Investment Environment
• FDI Decision Criteria
• Country Box: FDI in Israel
• Notes
• 4 The Multinational Enterprise
• Opening Case: Johnson & Johnson
• What is a Multinational Enterprise?
• The Degree of Internationalization
• History of the MNE
• The World’s Largest MNEs
• The Growth of Service MNEs
• The Image of the MNE
• The MNE in the Public Eye
• The Borderless Corporation: Myth or Reality?
• The Competitive Advantage of the MNE
• Capabilities and Competitive Advantage
• Types of Capabilities
• Capability Deployment
• Capability Upgrading
• The MNE from Emerging/Developing Economies (DMNE)
• The Largest Developing Country MNEs
• Obstacles Facing MNEs from Developing Economies
• DMNE Advantage in Global Markets
• Typical Features of DMNEs
• Country Box: An Israeli Firm Becomes the World’s Largest Generic Drug Maker
• The Small and Medium-Sized International Enterprise (SMIE)
• What is an SMIE?
• Size and Internationalization
• Obstacles to SMIE Internationalization
• Scale and Transaction Constraints
• Access to Capital
• Lack of Knowledge
• Lack of Market Power
• Vulnerability to Intellectual Property Violations
• SMIE Advantages in Internationalization
• SMIE Internationalization Features
• Internationalization Motivation
• Internationalization Patterns
• SMIE Exporter Profile
• Nature of FDI by SMIEs
• Industry Box: Investment Management and the SMIE
• Notes
• 5 Country Competitiveness
• Opening Case: Singapore’s Changing Competitive Advantage in the Hard Disk Drive Industry
• Defining Country Competitiveness
• Country Competitiveness and MNEs
• Country-Level Determinants
• Institutional System
• Infrastructure
• Macroeconomic Soundness
• Science, Education, and Innovation
• Internationalization
• Industry-Level Determinants
• Industry Box: E-Commerce as an Element of Country Competitiveness
• Firm-Level Determinants
• Individual-Level Determinants
• Country Box: Italy: Owner Sneaks Factory to Poland
• Interplay of the Four-Level Determinants
• Government Role
• A Historical Review
• A Renewed Recognition of Government Role
• Developed Countries
• Developing Countries
• Industrial Policy
• Notes
• 6 The Cultural Environment
• Opening Case: Renault-Nissan Alliance
• What is Culture?
• Culture and International Business
• Culture Does Not Explain Everything
• Correlates of Culture
• Language
• Religion
• National Culture Classifications
• Hofstede’s Dimensions of Culture
• Power Distance (PD)
• Uncertainty Avoidance (UA)
• Country Box: Toyota—A Shift in Toyota’s Corporate Culture
• Individualism/Collectivism (I/C)
• Masculinity/Femininity (M/F)
• Long-Term Orientation (LTO)
• Indulgence versus Self-Restraint
• Criticism of Hofstede
• Schwartz’s Classification
• The GLOBE Classification
• Trompenaars and Hampden-Turner’s Classification
• Other Dimensions of Culture
• National Culture Clustering
• The Ronen and Shenkar Clustering
• Subsistence and Rice Theories
• Measuring Cultural Differences
• The Positive Role of Cultural Differences
• The Friction Framework
• Corporate Culture
• Other Layers of Culture
• Ethnicity
• Industry
• Ideology
• Demographics
• Cultural Etiquette
• Cultural Stereotypes
• Convergence and Divergence
• Industry Box: Islamic Finance
• Notes
• 7 The Political and Legal Environment
• Opening Case: Bolivia Nationalizes Natural Gas
• The Political Environment
• Political System
• The Institutional Context
• Geopolitics and International Business Environment
• The MNE–Government Relationship
• The MNE Relationship with the Host Government
• MNE Political Objectives in the Host Country
• Host Government Objectives
• The Bargaining Power of the MNE and the Host Government
• Government Investment Support
• The MNE and its Home Government
• Coalition Building and Influence Tactics
• Industry Box: Managing Politics in the Automotive Industry
• Economic Freedom
• Political Risk
• The Measurement of Political Risk
• Types of Political Risk
• Strategies for Managing Political Risk
• Regional-Level Politics
• Micro-Region Political Processes
• The Legal Environment
• The Institutional Context
• Country Box: Indonesia: Manufacturers Life Weathers the Storm in Indonesia
• Legal Jurisdiction
• Jurisdictional Levels
• International Jurisdiction
• Regional Jurisdiction
• National Jurisdiction
• Legal Issues of Interest to the MNE
• Rule of Origin Laws
• Competition Laws
• Marketing and Distribution Laws
• Product Liability Laws
• Intellectual Property Laws
• Treaties
• Notes
• III Global Markets and Institutions
• 8 International Economic Integration and Institutions
• Opening Case: 3M’s Response to European Market Integration
• International Economic Integration
• Global-Level Cooperation Among Nations
• The World Trade Organization (WTO)
• Background and Structure
• Functions and Measures
• Country Box: Russia Joins the WTO
• The International Monetary Fund (IMF)
• The World Bank Group
• Other International Economic Organizations
• The United Nations Conference on Trade and Development (UNCTAD)
• The Organization for Economic Co-operation and Development (OECD)
• Regional-Level Cooperation Among Nations
• Postwar Regional Integration
• North America: The US-Mexico-Canada Agreement (USMCA), Formerly North American Free Trade Agreement (NAFTA)
• Europe: The European Union (EU)
• Industry Box: Siemens Sharpens its Focus to Respond to the Single Market
• Asia Pacific
• Latin America
• Africa and the Middle East
• Efficiency-Enhancing and Efficiency-Reducing Effects of Regionalization
• Commodity-Level Cooperation Among Nations
• Organization of Petroleum Exporting Countries (OPEC)
• Other Commodity Agreements
• Strategic Responses of MNEs
• Notes
• 9 The International Monetary System and Financial Markets
• Opening Case: Foreign Exchange Crisis in Mexico
• History of the International Monetary System
• The Gold Standard Period (1876–1914)
• The Inter-War Years and World War II (1914–1944)
• The Bretton Woods System (1944–1973)
• The Post-Bretton Woods System: 1973–Present
• Contemporary Exchange Rate Systems
• Fixed-Rate System
• Crawling Peg System
• Country Box: Hong Kong: Should the Hong Kong Dollar Retain the Fixed Peg to the US Dollar?
• Target-Zone Arrangement
• Managed Float System
• Independent Float System
• Advantages and Disadvantages of the Floating System
• Determination of Foreign Exchange Rates
• Foreign Exchange Rate Quotations
• Direct and Indirect
• Bid and Offer
• Spot and Forward
• Forward Premium and Discount
• Cross Rates
• Gold Standard
• Purchasing Power Parity (PPP)
• Interest Rate Parity (IRP)
• Foreign Exchange Rate Overshooting
• Implications for MNEs: Foreign Exchange Forecasting
• The Balance of Payments
• BOP Accounts
• Current Account
• Capital Account
• Financial Account
• Official Reserves Account
• Exchange Rates and BOP Imbalances
• International Foreign Exchange Markets
• Landscape of the International Foreign Exchange Market
• Market Participants and Functions
• Transaction Forms
• Spot Transactions
• Forward Transactions
• Swap Transactions
• Foreign Exchange Arbitrage
• Black Market and Parallel Market
• International Capital Markets
• International Money Markets
• International Bond Markets
• Industry Box: US Firms Find Cheaper Financing from Foreign Sources
• International Stock Markets
• International Loan Markets
• Major International Financial Crises in Recent Times
• The Asian Financial Crisis
• The Financial Perspective
• The Political/Institutional Perspective
• The Managerial Perspective
• The Global Financial Crisis
• Notes
• IV International Business Strategies
• 10 International Entry Strategies
• Opening Case: DuPont’s Entry Strategies into China
• Dimensions of a Market Entry Strategy
• International Location Selection (Where)
• Locational Determinants
• Cost and Tax Factors
• Demand Factors
• Strategic Factors
• Regulatory Factors
• Socio-Political Factors
• Country Box: Federal Express Shifts its Hub from Subic Bay to Guangzhou, China
• Decision Framework
• Location and Strategic Objectives
• Location and Global Integration
• Location and Market Orientation
• Timing of Entry (When)
• Uncertainty and Potential for Learning
• Exogenous Uncertainty
• Endogenous Uncertainty
• Competitive Preemption and Pioneering Costs
• Early Mover Advantages
• Early Mover Disadvantages
• Decision Framework
• Entry Mode Selection (How)
• Entry Mode Choices
• Trade-Centered Entry Modes
• Exporting
• International Subcontracting
• Countertrade
• Transfer-Centered Entry Modes
• International Leasing
• International Licensing
• International Franchising
• Build-Operate-Transfer (BOT)
• FDI-Centered Entry Modes
• The Branch Office
• The Cooperative (or Contractual) Joint Venture
• The Equity Joint Venture
• The Wholly Owned Subsidiary
• The Umbrella Holding Company
• Decision Framework
• Country-Specific Factors
• Industry-Specific Factors
• Firm-Specific Factors
• Project-Specific Factors
• Greenfield Investment, Acquisition, and Merger
• Industry Box: Unilever’s Acquisitions in Latin America
• The Evolutionary Path
• Notes
• 11 MNE Organization Structure and Design
• Opening Case: Procter & Gamble: Worldwide Structure
• International Strategy and Organization Design
• Global Integration and Local Responsiveness
• MNE Strategy and Design
• Subsidiary Roles and Imperatives
• Subsidiary Autonomy
• Subsidiary Knowledge Flow
• Subsidiary Importance and Competence
• MNE Organizational Structures
• The National Subsidiary Structure
• The International Division Structure
• The Global Functional Structure
• The Global Geographic Structure
• Country Box: Internationalizing the Board of Directors
• Combined Forms Using Geographic Areas
• Region-Specific Factors in Establishing Geographic Structures
• The Global Product Structure
• Types of Global Product Structure
• Industry Box: “Ford 2000”
• The Global Matrix Structure
• Integrating Global Operations
• Tools for Global Integration
• The Transition Challenge
• The Corporate Headquarters
• Notes
• 12 Building and Managing Global Strategic Alliances (GSAs)
• Opening Case: The Ford–Volkswagen Alliance
• Defining Global Strategic Alliances
• Types of GSAs
• Rationales for Building GSAs
• Challenges Facing GSAs
• Building Global Strategic Alliances
• Selecting Local Partners
• Goal Compatibility
• Resource Complementarity
• Cooperative Culture
• Commitment
• Capability
• Negotiating Alliance Contracts
• Structuring Global Strategic Alliances
• Country Box: Fujitsu in Spain: Barriers to Alliance Management
• Managing Global Strategic Alliances
• Managing Inter-Partner Learning
• Exercising Managerial Control
• Heightening Cooperation
• Personal Attachment
• Reducing Conflicts
• Thinking Ahead of Exit
• Industry Box: Wisdom Gained from Experience in Building GSAs
• Notes
• 13 Managing Global Research and Development (R&D)
• Opening Case: Intel’s R&D Network in Developing Countries
• Why Globalize R&D?
• Benefits and Challenges of Global R&D
• Country Box: India: R&D Centers of Global Companies in India
• Designing and Structuring Global R&D
• Types of Foreign R&D Units
• Selecting R&D Location
• Industry Box: Ford Locates its R&D Center in Aachen, Germany
• Structuring Global R&D Activities
• Managing and Operating Global R&D
• Human Resource Management
• Autonomy Setting
• Global Planning
• Communication Improvement
• Rules and Procedures
• Electronic Communication
• Boundary Spanners
• Informal Network
• Cultural Adaptation
• Technology Transfer across Borders
• Notes
• V Functional International Business Areas
• 14 Financial Management for Global Operations
• Opening Case: Minimizing Exposure in RTZ
• Why Learn Financial Management?
• International Trade Finance
• International Trade Payment
• Cash in Advance
• Letter of Credit (L/C)
• Documentary Collection
• Open Account
• Means of Payment Remittance
• Export Financing
• Private Sources
• Export Factoring and Forfeiting
• Bankers Acceptance
• Corporate Guarantee
• Governmental Sources
• Foreign Credit Insurance
• Financing for Global Business
• Intercompany Financing
• Equity Financing
• Debt Financing
• Local Currency Financing
• Financing Decisions
• Managing Foreign Exchange Risk and Exposure
• Foreign Exchange Risk and Exposure
• Transaction and Economic Exposures
• Managing Transaction Exposure
• Hedging with Financial Instruments
• Hedging with Contract Invoicing and Clause
• Managing Economic (Operating) Exposure
• Financial Initiatives
• Production Initiatives
• Industry Box: Netting in Philips
• Global Coordination of Exposure Management
• Country Box: India Faces Dilemma on Foreign Exchange Hedging
• Working Capital Management
• Cash Management
• Foreign Receivable Management
• Notes
• 15 International Accounting for Global Operations
• Opening Case: Multinationals Face Heftier Tax for Foreign Operations
• Country Differences in Accounting
• Why Accounting Systems Differ Among Countries
• Institutions
• Societal Culture
• External Relations
• Industry Box: Accounting Diversity in Siemens
• National Accounting Zones
• International Accounting Harmonization
• International Accounting Standards
• Country Box: Australia: Accounting in Australia
• Foreign Currency Translation
• Commonly Used Translation Methods
• Harmonization of Translation Methods
• International Accounting Information Systems
• Transfer Pricing and Taxation Strategies
• Why Transfer Pricing?
• Transfer Pricing Techniques
• Transfer Pricing Regulations and Penalties
• Tax Havens, Treaties, and Strategies
• Tax Havens
• Tax Treaties
• Other Tax Strategies for MNEs
• Notes
• 16 Global Marketing and Supply Chain
• Opening Case: Domino’s Pizza
• The International Marketing Challenge
• Assessing Market Potential
• The Luxury Market
• Globalization and Localization in International Markets
• Globalization Forces
• Global Brands
• Why Global Products?
• Marketing Repercussions of a Global Approach
• Localization Forces
• Product Adaptation
• Country Box: Kimchi Wars
• Country-of-Origin Effect
• Leveraging Positive Country Image
• Leveraging Nationalist Sentiments
• Branding
• Channel Decisions
• Intermediation
• Direct Marketing
• Niche Marketing
• Pricing
• Predatory Pricing
• Promotion
• Advertising
• Marketing Alliances
• Digital Marketing
• The Global Supply Chain
• The Globalization of Supply Chains
• The Challenge for SMIEs
• Global Sourcing
• Logistics Providers
• Customizing the Supply Chain
• National Variation
• Product and Logistics Customization
• Packaging
• Transportation Modes
• Maritime Transportation
• Rail
• Air Transport
• Crossing National Borders
• Industry Box: Global Logistics at Wal-Mart
• Notes
• 17 Global Human Resource Management
• Opening Case: Managing Global Human Resources at HSBC
• Strategic IHRM
• Staffing the MNE
• The Globalization of Boards of Directors
• Selecting Global Board Members
• Industry Box: Airline Pilots Go Global
• Country Box: Korean Companies Seek Global Talent
• Staffing the MNE Ranks
• Country-Specific Issues
• The Expatriate Workforce
• Types and Distribution of Expatriates
• Using Expatriates: Pros and Cons
• Expatriate Failure
• Expatriate Selection
• Expatriate Selection Instruments
• Preparing for a Foreign Assignment
• Expatriate Training
• Choosing a Training Method
• Compensation
• Cost and Elements of Expatriate Compensation
• Approaches to Expatriate Compensation
• Culture and Compensation
• Repatriation
• HRM in International Affiliates
• Human Resource Problems in Foreign Affiliates
• Notes
• VI Emerging Issues in International Business
• 18 Digital Connectivity and Global Strategies
• Opening Case: IBM Acquires Red Hat to Sharpen Digital Global Connectivity
• Internet and Global E-Commerce1
• Digital Global Connectivity
• What Is Digital Global Connectivity?
• New Forms of Digital Global Connectivity
• Industry Box: Siemens’s Digital Global Strategy
• How Digital Globalization Changes International Business
• Intangible Commerce Booms
• Knowledge Diffusion Grows
• Digital Infrastructure Vitalizes
• Mini-MNEs Rise
• Global Consumers Shake Up
• Emerging Economies Leapfrog
• Global Business Ecosystems Thrive
• Rewards and Risks of Digital Global Connectivity
• Rewards from Digital Global Connectivity
• Expanding Global Customers
• Reducing Transaction Costs
• Improving Consumer Experience
• Augmenting Open Innovation
• Buttressing Managerial Efficiency
• Risks from Digital Global Connectivity
• Interdependence Risks
• Cyberattacks and Information Security
• Reputation Fragility
• New Rivalry Disruptions
• Assessing Digital Infrastructure
• Physical Digital Infrastructure
• Science, Education, and Innovation in Digitization
• Country Box: Digital Infrastructure in the Philippines and Malaysia
• Institutional and Regulatory Environment of Digitalization
• Building Digital Global Connectivity Capabilities
• Global Business Platforms
• Industry Box: Equinix as a Global Platform
• Notes
• 19 Global Sustainability and Social Responsibility
• Opening Case: Shell’s Brent Spar Project
• Global Sustainability
• Corporate Social Responsibility in International Business
• MNE Social Responsibilities
• Environmental Responsibilities
• Consumer Protection
• Corporate Governance
• Industry Box: Social Impact Assessment Steps at Shell
• Global Guidelines and Mandates
• A Culture of Social Responsibility
• Auditing and Assessing MNE Social Responsibility
• Corruption in International Business
• Definition and Magnitude of Corruption
• The Origins of Corruption
• Drawbacks of Corruption
• Corruption Rankings
• Types of Corrupt Practices
• Smuggling
• Money Laundering
• Piracy and Counterfeiting
• Bribe Paying
• The Foreign Corrupt Practices Act (FCPA)
• The Globalization of the Fight Against Corruption
• Country Box: Drug Companies Face Bribery Probe on Payments to Officials of Foreign Emerging Markets
• Notes
• 20 International Entrepreneurship
• Opening Case: Will Entrepreneurship Help Japan Regain its Lost Decades?
• Defining International Entrepreneurship
• Comparative Entrepreneurship
• Culture and Entrepreneurship
• Funding New Ventures
• Cross-Border Entrepreneurship
• Internationalizing the Born Global Enterprise
• Industry Box: Israeli Start-Ups in the Global Marketplace
• Notes
• Index