Firm profitability depends on firm characteristics, industry structure and home-country institutions. Firm profitability is negatively associated with institutional quality. The effect of entry regulation on profitability runs through competition, while the effect of legal and political institutions only partially runs through competition.

Corporate governance is fundamentally about such questions as what business is for—and in whose interests companies should be run, and how. Wider issues such as business ethics through entire value chains, human rights, bribery and corruption, and climate change are among the great issues of our time that increasingly cross-cut the rarefied worlds of corporate boardrooms. As a result, a growing proportion of SustainAbility’s work has seen the fusion of corporate governance with such wider societal concerns. This paper reviews the increasingly complex cross-connects between the rapidly mutating governance agenda and the burgeoning world of corporate responsibility, social entrepreneurship and sustainable development. We will move through three stages: (1) a brief review of work that SustainAbility has done in the area of corporate governance; (2) the three great waves of societal pressure on business since 1960, and where things seem likely to head next; and (3) some headline conclusions that emerged in this field from the World Economic Forum’s 2006 annual summit in Davos. [ABSTRACT FROM AUTHOR] .

Many Western multinationals expect to find most of their future growth in emerging economies. But they have frequently struggled to exploit the opportunity, relentlessly cutting costs and accepting profit margins close to zero. The problem, say the authors, who are all with the innovation consultancy Innosight, is not that those companies can't create viable offerings but that simply transplanting their domestic business models to the new markets won't work.

Business leaders are scrambling to adjust to a world few imagined possible just a year ago. The myth of a borderless world has come crashing down. Traditional pillars of open markets—the United States and the UK—are wobbling, and China is positioning itself as globalization’s staunchest defender. Countries throughout North America and Europe have experienced waves of antiglobalization sentiment. In the face of such uncertainty, leaders of multinationals wonder whether they should retreat, change strategy, or stay the course. In making that decision, they need to understand two things. First, the world is less globalized than even experienced executives realize. Second, history tells us that even in the face of a trade war, international trade and investment would still be too large for strategists to ignore. Today’s turmoil calls not for a mass retreat from globalization but for a more subtle reworking of multinationals’ strategies. This article examines common misperceptions about what is—and isn’t—changing about globalization and offers guidelines to help leaders decide where and how to compete in a complex world. INSET: WHAT ARE YOUR GLOBALIZATION OPTIONS?. [ABSTRACT FROM AUTHOR]

Reverse innovation-developing ideas in an emerging market and coaxing them to flow uphill to Western markets-poses immense challenges, because it requires a company to overcome the institutionalized thinking that guides its actions. That's why the experience of the automobile-infotainment division of Harman International is so impressive. The U.S.-based business, known for ultrasophisticated dashboard audiovisual systems designed by German engineers, developed a radically simpler and cheaper way of creating products in emerging markets and then applied what it had learned in the process to its product- development centers in the West. Harman did this using a two part approach: radical change from below combined with astute leadership from above.

The combination of globalization and negotiation holds the potential for the most creative inter-organizational arrangements. Indeed. human progress has always depended on the innovations yielded by international trade. The essence of international trade is the face-to-face meetings between managers from different countries. We know that diversity yields creative outcomes - that is, when communication problems associated with diversity don't get in the way of the efficient and effective exchange of ideas. This article provides a set of tools (1) for avoiding the many pitfalls of negotiations across cultures and

Many companies are not dramatically changing to more sustainable environmental practices despite pressure from the investment community, the government and consumers. This study explores a simple model that companies can use to understand and improve supply chain sustainability practices. It applies this model in two case studies, Coca-Cola, a leader in global sustainability, and Apple, a company that has only recently started to develop a sustainability strategy. The model was developed through a review of existing research and an application of supply chain principles. The results of this study demonstrate that following this model to eliminate waste throughout the supply chain will make the supply chain more profitable. The outcomes from this study highlight the importance for every company to do so in order to stay competitive. This study is unique in the relative simplicity of its model, combined with the supporting evidence that a sustainable supply chain is the same as a supply chain that is using best practices to reduce waste.

When misunderstandings arise among members of global teams, it’s often because managers conflate attitudes toward authority and attitudes toward decision making. However, the two are different dimensions of leadership culture, says the author, who has extensive research and consulting experience with global companies. Attitudes toward authority range from strongly hierarchical to strongly egalitarian. Approaches to decision making vary from top-down to consensual. The author explores both dimensions and classifies selected countries according to their position on both scales. The Japanese, for example, are hierarchical in their views toward authority— deferential to the boss and accustomed to waiting for instructions rather than taking the initiative—but they are consensual decision makers who get buy-in before they set a course of action. The author describes the four cultural types—consensual and egalitarian; consensual and hierarchical; top-down and hierarchical; and top-down and egalitarian—and the corresponding expectations about leadership in each environment. If you keep those in mind, you’ll be more successful in your cross-cultural interactions. INSET: MAPPING LEADERSHIP CULTURES. [ABSTRACT FROM AUTHOR]

A new breed of multinationals from emerging markets is appearing in many industries. Western firms are wrong to underestimate, as they often do, the competitive threat from these firms. The discussion herein highlights the non-traditional competitive advantages these firms use to win at home and abroad and shows how these firms use internationalization not only to exploit competitive advantage but to bolster it. The article concludes with suggestions for how Western managers should respond to the competitive threat from emerging market multinationals. [Copyright &y& Elsevier]

As growth has picked up in emerging markets and slowed in advanced economies, firms everywhere have had to rethink their global strategies. Developed country MNEs (DMNEs) have had to gear up to exploit new opportunities and resources in emerging markets, and emerging market firms have had to figure out how to take advantage of opportunities and resources in the rest of the world. The article in this issue by de la Torre and Chacar (2012) looks at the first kind of challenge, through an empirical analysis of DMNE responses to regional integration in Latin America, while that by Madhok and Keyhani (2012) looks at the second kind of challenge, through a conceptual analysis of how and why emerging market MNEs (EMNEs) internationalize.

The prevalent view among family-firm internationalization scholars is that family management discourages internationalization. This is because selling abroad is said to require more specialized managers and more resources than selling at home, and yet family firms are unwilling to recruit non-family managers with the required international skills and to dilute their control to obtain the necessary finance. We hypothesize that this argument overlooks the possibility that managers of family-managed SMEs choose business models that both minimize the above-mentioned limitations and leverage the strengths of family governance. Specifically, we argue that selling quality products in global niches allows family-managed SMEs to internationalize without the cosmopolitan managers and the high financial investments required for selling mass-market products abroad; at the same time a global niche business model requires the long time horizon and the high level of social capital that family governance can provide. Modeling a firm's foreign sales through a gravity model, we test this hypothesis on a large sample of SMEs from four European Union countries. We find that family-managed SMEs have fewer foreign sales than other type of SMEs, but that the difference is partially bridged if family-managed SMEs have adopted a global niche business model. [ABSTRACT FROM AUTHOR]

The article reports on spending heavily on an innovation for a market in which customers have so little money. Logitech Inc. formed a special team with an urgent mission in March 2009. The company had been caught off-guard when consumers in China unexpectedly embraced another mouse by a Chinese company called Rapoo..