International Business

In this chapter we revisit the empirical findings of Rugman and coauthors concerning overwhelming home-regionalisation among the world’s largest firms. Using a longitudinal research design and continuous measures of internationalisation we discover a number of secular trends. We find that sales growth beyond the home region is considerably faster than sales growth in the home region. We use our empirical results to critique and augment existing regionalisation theory. In particular, we raise doubts about the sharp distinction in the literature between expansion in the home region and expansion in host regions. It would seem that firms expand simultaneously within and outside their home region, targeting individual countries rather than entire regions.

The current search for new trading partners in unexpected geographic areas demonstrates the extent to which Brazil has changed its foreign policy the last few years. With an agenda that has focused primarily on global business performance, the Middle East has emerged as a key area for Brazilians who want to expand the consumer market of their companies.

International new ventures (INVs) are a popular mode of entry into foreign markets. INVs, those companies that enter foreign markets at inception, often suffer the two liabilities of newness and foreignness, which may increase the odds of their failure. This paper empirically examines the survival of INVs by comparing them to other sequential modes of international operations (e.g., acquisitions). Data from 275 British firms show that INVs have lower unconditional survival probabilities than other modes of foreign market entry. Our analyses  also show that differences in survival probabilities disappear when the firms’  competitive strategies are considered.

The article first describes characteristics of major infrastructure projects. Second, it documents a much neglected topic in economics: that ex ante estimates of costs and benefits are often very different from actual ex post costs and benefits. For large infrastructure projects the consequences are cost overruns, benefit shortfalls, and the systematic underestimation of risks. Third, implications for cost–benefit analysis are described, including that such analysis is not to be trusted for major infrastructure projects. Fourth, the article uncovers the causes of this state of affairs in terms of perverse incentives that encourage promoters to underestimate costs and overestimate benefits in the business cases for their projects. But the projects that are made to look best on paper are the projects that amass the highest cost overruns and benefit shortfalls in reality. The article depicts this situation as ‘survival of the unfittest’. Fifth, the article sets out to explain how the problem may be solved, with a view to arriving at more efficient and more democratic projects, and avoiding the scandals that often accompany major infrastructure investments. Finally, the article identifies current trends in major infrastructure development. It is argued that a rapid increase in stimulus spending, combined with more investments in emerging economies, combined with more spending on information technology is catapulting infrastructure investment from the frying pan into the fire.

We analyze governance with a new dataset on investments of venture capitalists in 3848 portfolio firms in 39 countries from North and South America, Europe and Asia spanning 1971–2003. We provide evidence that cross-country differences in legality, including legal origin and accounting standards, have a significant impact on the governance structure of investments in the VC industry: better laws facilitate faster deal screening and deal origination, a higher probability of syndication and a lower probability of potentially harmful co-investment, and facilitate investor board representation of the investor. We also show that country-specific differences exist apart from legal and economic development.