Abstract: This research argues that a firm responds to rising geopolitical risk (GPR) by adjusting its sales strategy. Specifically, in response to rising GPR, a firm lowers the concentration of its sales to customers, i.e., allocates sales revenues more evenly across its customers instead of relying on a few major customers. Analysis of a panel data set of 49,018 firm-year observations of 5,933 U.S. public firms between 2001 and 2021 supports their hypothesis. The firm’s lobbying spending strengthens the effect of GPR on customer concentration. Further, while a firm does not change its corporate customer concentration, it lowers the government customer concentration when GPR rises. Also, in response to rising GPR, an average firm decreases each of its domestic customer concentration and its foreign counterpart, though the effect on domestic customers exceeds that on the foreign customers. Moreover, reducing customer concentration in response to rising GPR hurts firm performance by impeding the firm’s number of new product introductions. The findings contribute to the literature on exogenous shocks in the nonmarket environment impact a firm’s strategic decisions. 

Abstract: Research suggests that multinational enterprises (MNEs) divest subsidiaries from host countries with high uncertainties that directly affect firms’ operations. We argue that MNEs also use divestitures as strategic responses to host-country sociopolitical uncertainties that seemingly irrelevant to their businesses. Sociopolitical uncertainties in host countries, arising from the legislative changes on highly controversial social issues, can significantly increase MNEs’ overall operational and reputational costs through rising stakeholder pressures. Leveraging the lesbian, gay, bisexual, transgender, and queer (LGBTQ) legislation context, we thus hypothesize that MNEs will implement more divestitures from host countries with anti-LGBTQ legislation. Our difference-in-differences (DiD) analysis based on a dataset of 513 U.S. MNEs’ 141,013 foreign subsidiaries operating in 143 countries during 2009–2022 supports the arguments. Moreover, the results suggest that the escalating effect of host-country anti-LGBTQ legislation on MNEs’ divestitures is weakened by firm LGBTQ-supportive policies and strengthened by liberal LGBTQ policies in MNEs’ home states. This research adds to the literature on corporate sociopolitical activism, grand challenges, stakeholder management, and international business.

Abstract is available upon request.

Abstract: Outward foreign direct investment (OFDI) of manufacturing state-owned enterprises (SOEs) from emerging economies (EE) has emerged as a significant phenomenon in global markets. Although previous research has emphasized the bright-side of state ownership in facilitating SOEs’ OFDI, the stream of research largely overlooks its dark-side effects. Drawing on resource dependence theory (RDT), we argue that state ownership creates dependence of SOEs on their home governments, which may undermine manufacturing SOEs’ willingness to conduct OFDI, autonomy and market orientation, and legitimacy in overseas markets. Thus, substantial state ownership may counteract with manufacturing SOEs’ OFDI from EE. Our empirical results, based on a sample of 507 Chinese publicly-listed manufacturing SOEs during 2007–2013, show that a high percentage of state-owned shares exerts negative effects on SOEs’ OFDI. Relative to local SOEs, central SOEs are less likely to engage in OFDI. Further, the negative effect of the percentage of state-owned shares on SOEs’ OFDI will be alleviated by institutional development and competition intensity. The study contributes to literature by making a real theoretical case for the dark-side effects of state ownership on manufacturing SOEs’ OFDI from EE. 

Abstract: This paper examines how ties to large-scale state-owned enterprises and ties to banks affect firm performance in emerging economies. The findings, obtained from survey data collected from 208 firms in the Chinese manufacturing industry, indicate that both categories of ties improve firm performance. The value of the two categories of ties changes in organizational contexts that vary in terms of the moderators of size, age, and firm strategy. Specifically, ties to banks improve the performance of younger firms significantly more than that of older firms, while ties to large-scale state-owned enterprises improve the performance of smaller firms significantly more than that of larger firms.