THE IMPACT OF FAMILY ADJUSTMENT IN EXPATRIATE SUCCESS
Murat Sakir Erogul and Afzalur Rahman
Family adjustment to a new country plays a significant role in expatriate success. This paper investigates the reasons behind expatriate failure relative to personal characteristics of partner, family characteristics, and cultural distance. The authors discuss family related issues and contribute to the better understanding on the problems that cause expatriate failure through identity theory and investigate how organizations could support the expatriate experience by taking into consideration the role of the spouse and family, along with cultural distance to the expatriate destination. There are only a few studies that link experiences of expatriate family and partner to international assignment success. We add to this research by examining the spouse and family adjustment process through the use of identity theory. We provide guidelines on the impact of family adjustment in expatriation literature to help organizations better equip both the expatriate employee and their family with sufficient cross-cultural training and social learning opportunities. Our contribution provides a level of analysis on determining expatriation success factors and guiding organizations in facilitating the cultural adjustment of expatriates and their families. The paper provides implications to industry and practice on key success factors needed to reduce failure.
INCORPORATING INTER-FIRM SOCIAL CAPITAL INTO INTERNATIONAL BUSINESS THEORY
This paper explores and provides an understanding of how B-to-B relationships can be better understood by incorporating a social capital (SC) framework. It argues that SC dimensions (i.e., relational, cognitive and structural), underpin alliances that are salient to international business (IB). A synthesis of the literature on B-to-B SC and loyalty into a single, process-based framework is established, together with institutional texture insights for firms to harness and develop for success. The central argument is that investments in relationship building not only enhance B-to-B loyalty but over time fashion the nature and depth of the alliance for the international firm. The paper adds to the literature on international B-to-B collaborations whilst having the potential in providing managerially relevant ("actionable") results in ‘how’ and in ‘what way’ B-to-B SC can be harnessed in the 21st century IB system.
DOES BROWNIAN RISK MATTER IN DEBT OR EQUITY ISSUANCE AND REPURCHASE DECISION IN INDIAN NON-FINANCIAL COMPANIES?
Pankaj Sinha and Shalini Agnihotri
External commercial borrowings (ECBs) of Indian non-financial firms have grown by 107 % in past few years. Looking at the high reliance of firms on external debt, this paper investigates the effect of foreign exchange, interest rate and firm specific risk on the debt issuance and retirement decision. It also investigates the factors affecting equity issuance and retirement decision of the firms. Foreign exchange risk and interest rate risk is estimated using stochastic volatility and GARCH (1,1) methods. Firm specific risk is calculated using Black-Scholes Merton model for company valuation. The results highlight that interest rate risk negatively affects the debt issuance and positively affects debt retirement decision of the firms. However, the foreign exchange risk does not affect debt issuance and retirement decision. Firm-specific risk negatively affects propensity of debt issuance of firms but plays no role in debt retirement. Foreign exchange risk, firm-specific risk, and profitability negatively affect propensity of issuance of debt to issuance of equity. This result supports the view that risky firms are more likely to finance their capital needs via new equity issues rather than by new debt issues to avoid the high-risk premium and to limit the likelihood of bankruptcy.
CHINA FDI BOOMS BUT PROBLEMS PERSIST FOR FIES
M. John Foster and Choo Shin Tseng
China has become one of the major recipients of foreign direct investment since Chairman Deng determined in 1978 that China’s economic door should be opened, for both trade and investment. Despite the fact that there is now over thirty years of accumulated knowledge and experience of this new, open China market on which to draw, there are cases where it has proved difficult to deal with China as partners due to legal and regulatory frameworks operating in China. This is true not only for western-based, non-Chinese firms but also for firms from the Chinese diaspora. We examine a number of such problematic cases, seeking to understand the roots of the problems experienced by the foreign entities and what may be the solutions. All of the case firms experienced difficulties to some degree with the Chinese legal system, the regulatory system, or what might be called tacit regulation, where investing firms have difficulty with other firms such as suppliers who are not part of the legal, or quasi legal system, but have effects on the investors which seem to have the tacit support or approval of government. The experience of these case firms confirms the picture that it is hard for foreign directed entities to win legal or regulatory battles in China.
THE IMPACT OF FINANCIAL CRISIS ON THE DETERMINANTS OF CAPITAL STRUCTURE OF LISTED FIRMS IN INDIA
Naliniprava Tripathy and Aman Asija
This study investigates the impact of 2007 financial crisis on the performance of capital structure of 88 non-financial companies listed on National Stock Exchange of India during the period between January 2003 to May 2014 by using Fixed Effect (FE) and Random Effect (RE) Models. The study has divided the data period into two distinct time intervals: (2003 -2007) as “pre-crisis” periods and (2008 – 2014) as “post-crisis” periods. The determinants of capital structure such as size, liquidity, profitability, and tangibility are used in the analysis. The findings show that tangibility and size have a greater influence on capital structure decision before crisis period. The findings also show that the coefficient of profitability is negative, displaying an inverse relationship with leverage. The study concludes that pecking order theory has more explanatory power in comparison to other theories in explaining the factors that determine the capital structure decision of listed firms of India.