economic problem of a society is mainly one of rapid adaptation in the
particular circumstances of time and space.”
A. Hayek (1945: 524)
Figure 1. My “Space-Time-Adaptation”
philosophy for knowledge expansion
Arrows suggest three dimensions of
knowledge expansion from ignorance.
Outer elements suggest knowledge
infrastructures through which knowledge should be created and integrated.
[back to the top of the page]
covers four interrelated areas:
diversity and dynamics of economic, social, and political institutions
strategy from a top management perspective that adapts to such diversity and
markets, which offer large variations in institutional diversity and dynamics
to study business strategy;
(re)designing the science-practice ecosystem for business administration.
Scholarly Publications | Selected Publications for
Managers & Policy Makers
| Full List
coordinator (2018 – Present): Global OpenLabs for Performance-Enhancement Analytics
and Knowledge System (GoPeaks)
more than six decades of scientific research of business administration,
the stock of our knowledge is at a volume that makes knowledge synthesis
for business applications possible, and meanwhile makes knowledge creation
activities more confused without a shared knowledge navigation system. Like
the pharmaceutical industry which historically emerged as a new ecosystem
to synthesize scientific research into medicines as well as to guide and
fund basic research, time is ripe to (re)invent
a science-practice ecosystem in business administration to
synthesize disperse scientific findings into business analytics tools and
to more systematically guide and fund academic research. I thus propose a
new industry-academia research partnership named “Global OpenLabs for
Performance-Enhancement Analytics and Knowledge
System” (or “GoPeaks” for short).
See more at GoPeaks.org.
Coordinator & Editor (2011 – Present): Emerging Market Global Players,
Columbia Center on Sustainable Investment
Emerging Market Global Players (EMGP) project, a collaborative effort led
by CCSI, brings together researchers on FDI from leading institutions in
emerging markets to gather original data from company surveys and
additional research and to produce annual reports based on their findings.
Those EMGP reports identify the top multinationals from each of a number of
emerging markets, provide detailed information on the key features of the
firms’ activities abroad, and discuss other issues, including the underlying
policy context influencing outward investment from those emerging markets
and the impact of the MNEs on sustainable development. More at http://ccsi.columbia.edu/publications/emgp/.
paper 1: Socializing shareholders in agency theory, with
develop a socialized agency theory to incorporate two key components of
social diversity of shareholders into the traditional agency theory. First,
we extend the market logic of shareholder value (“how much”) into the
social logic of shareholder values (“what for”). We then conceptualize the
shareholder objective conflicts as a vector of distance between
shareholders in the spectrum of market and social logics. Second, we draw
on shareholder power to include both property rights and social pressures.
We suggest power inequality between shareholders should encompass both
forms of power. We use this categorization of shareholders to predict whether
they use voice and exit to discipline the managerial behavior. Our paper
builds a more integrative and realistic conceptual framework to understand
the conflicts between powerful shareholders in corporate governance that
are ubiquitous around the world.
Complexity and evolution of globalization, with J Cantwell
“Foreignness” has been a key construct in globalization studies. However,
drawing social boundaries simply in national terms fails to capture the
full range of diversity and complexity entailed by globalization. Drawing
on evolutionary theorizing, we develop a new typology of outsidership in
global business contexts. We suggest that a series of mutually exclusive
and sequential social “replicators” jointly program individual and
organizational behaviors and give rise to distinct path-dependent social
trajectories. These replicators include genes, pre-linguistic habits,
grammatical languages, customs, writing systems, judicial systems, and
scientific paradigms. Outsidership is conceptualized as being historically
outside a shared path of these replicators.
A critical review of management knowledge ecosystem, with MA Hitt
Synopsis: A major
challenge facing business schools is the divergence between practical
demand for integration and scientific knowledge fragmentation. Using
examples of a select list of elite management journals created in response
to the 1950s science movement, we discuss the risks of potentially
broadening this gap because of: (1) limited introduction of knowledge from
foundational disciplines; (2) a limited definition of “interesting” and
“counterintuitive” knowledge; (3) discipline silos with a narrow
theoretical focus and bounded values and assumptions; (4)
over-generalizations of theories and findings. In the context of the
overall management knowledge ecosystem, we recommend addressing three major
constraints that limit our ability to reduce the gap between practical
demand for integration and scientific knowledge fragmentation. First, new
technologies could be introduced to assist researchers and editors in the
development of a complete review of existing theories and evidence. Second,
new publication outlets could be designed to serve as IT-enabled, web-based
knowledge synthesis platforms. Third, business schools could develop new
incentives system to enable and promote the use of these new initiatives.
Hobdari B, Zhang Y. 2018. Blockholder heterogeneity and conflicts in
cross-border acquisitions. Journal of
Corporate Finance, in press. (Special issue
on “Corporate governance of multinational enterprise”).
investigate the principal-principal (PP) conflicts between large
blockholders in the context of cross-border acquisitions (CBAs). We focus on
the conflicts between family blockholders and two groups of financial
institutional investors – banks and mutual funds. We hypothesize that
different types of blockholders have heterogeneous preferences with respect
to the CBA decision and outcomes. We suggest that the PP conflicts in CBA
differ across the blockholders. Banks are pressure sensitive and
cooperative with the management because of their clientele relationship
with firms, while mutual funds are subject to more financial scrutiny and
independent from the management, making them pressure resistant. When in
conflict with more powerful family blockholders, mutual funds will choose
to exit after a CBA decision, whereas banks are more likely to stay. With
an equally distributed voting power, family and mutual fund blockholders
will be more motivated to monitor over each other and jointly discipline
the management, leading to more careful selection of CBAs and higher
overall shareholder value. However, such effects are weak in the case of
family and banks. We find support for these conjectures using data on CBAs
undertaken by US public firms over the period 2003-2016.
Chen VZ, Musacchio A, Li S. 2018. A
principals-principals perspective of hybrid Leviathans: Cross-border
acquisitions of state-owned MNEs. Journal
of Management, in press.
propose a private-government principals-principals (PP) approach to
understand corporate governance of state-owned multinationals. We explain
how the conflicts between large government and private blockholders may
affect managerial decisions in the propensity of completing a cross-border
acquisition and its dollar value. We argue that conflicts among different
blockholders make it difficult to pursue large-scale, cross-border deals
because such conflicts may lead to a less coherent objective function and
to reject deals that do not satisfy these groups’ conflicting objectives.
Finally, we show that such blockholder conflicts are moderated by the
salience of the government’s “dual influence” on the firm in question,
related to a state’s soft-budget constraint and/or diplomatic advantages in
countries where the host and the home markets do not enjoy a bilateral
investment treaty. Empirically, we have found highly supportive evidence
based on a global sample of 7,564 cross-border acquisitions between the years
of 2004 and 2013.
Sun SL. 2018. Barbarians at the gate of the middle kingdom: The
international mobility of financing contract and governance, Entrepreneurship Theory and Practice, in
on equity ratchet as a practice, we study how foreign private equity (PE)
investors interacted with local agents in the process of legitimation and
legalization of foreign financing contract and governance in the Chinese PE
industry, while it was underdeveloped. Based on seven cases in China, we
propose a three-stage micro-process model of international institutional
entrepreneurship in an emerging field with high ambiguity: framing a
motivational vision to promote a new practice; early adoption by local
non-mainstream agents who gain legitimacy from diverse sources of
institutional logic; and dominant mainstream adopters seeking legal
protection to sustain their benefits. Our theory extends the emerging
discussion on the transfer of corporate governance and institutional
entrepreneurship across borders.
Sun SL, Chen VZ, Sunny SA, Chen J. 2018. Venture
capital as an innovation ecosystem engineer in an emerging market. International Business Review, in press.
(Special issue on "Competitive dynamics and co-evolution of MNCs and
local rivals in emerging markets").
Abstract: How can
venture capital (VC) firms transform a weak innovation ecosystem into a
productive and robust one? While the literature has found VC firms’
catalyst role in innovation in developed markets, we know little about
whether and how they affect innovation in an emerging market, where formal
institutions (e.g., regulations and markets) and informal institutions
(e.g., professional networks) to enable VC firms’ catalyst role are
relatively lacking. First, we argue that VC firms play a different and more
proactive role in these markets as an “ecosystem engineer” through
governing the resource flow and selecting deviation, which drive regional
innovation performance. Second, such effects are further positively
moderated by the presence of multinational enterprises (MNEs) in a region.
Lastly, over time, while the direct effects of VC firms persist and
increase, the moderating effects of MNE presence decline. Empirically, we
examined a Chinese provincial-level panel data of VC activities (1999-2009)
and patent applications (2000-2010) and found supportive evidence.
Implications are discussed.
Li J, Shapiro DM, Zhang XX. 2014. Ownership structure and innovation
performance: An emerging market perspective, Asia Pacific Journal of Management, 31(1), 1-24. (2014 Best
attention has been focused on the ways in which emerging market firms can
obtain and mobilize the knowledge and resources required for innovation.
Innovation is a particular challenge in emerging markets because of
inadequate external institutions. In this study, we focus on the importance
of ownership structure, and in particular on ownership type diversity and
ownership concentration. Using transaction cost and agency theories
embedded in an emerging market context, we argue that ownership structure
provides an important mechanism by which firms can assemble and direct the
resources necessary for innovation in the context of inadequate external
institutions. Specifically, we hypothesize that ownership type diversity
improves innovation performance and that increasing ownership concentration
has the same effect, but only up to a point. Using a self-tailed panel data
of 487 and 475 Chinese listed companies during 2004-2005 and 2005-2006
respectively, we find supportive empirical evidence for our hypotheses. Our
findings also suggest ownership type diversity has a more significant
statistical effect on innovation performance than does ownership
concentration, although most of the extant literature focuses on the
J, Newenham-Kahindi A, Shapiro DM, Chen VZ. 2013. The two-tier bargaining
model revisited: Theory and evidence from China’s natural resource
investments in Africa. Global
Strategy Journal, 3, 300-321.
Abstract: In recent years, foreign direct
investment (FDI) in natural resource industries by Chinese firms in Africa
has increased rapidly. The strategic importance of the natural resource
sector to host country governments produces considerable bargaining over
entry and operating terms, with attendant political risks. Using case
studies in Tanzania, we find that the Chinese government and firms engage
in a bargaining model different from the traditional models. Specifically,
they engage in a modified one-tier bargaining model in which the Chinese
government represents the collective interests of Chinese natural resource
firms to negotiate with the host country government. In exchange for
investment deals in the natural resource sector, the Chinese government
offers a package with loans that support multiple-purpose development
projects in various sectors, with a focus on infrastructure. Chinese firms
act as a group to fulfill the Chinese government’s commitments to the host
country government. We discuss the boundary conditions for this
Chinese-style bargaining model and its relationship to political risk. We
conclude that the Chinese model has unique elements, although they are
likely limited to resource investments in developing countries.
PUBLICATIONS FOR MANAGERS & POLICY MAKERS
Li Y. & Hambright S. (2016). Regulatory institutions and Chinese
FDI: An empirical review. Multinational
Business Review, 24(4), 302-333.
Abstract: This paper seeks to review the effects of home
regulatory institutions on outward FDI (OFDI) in the context of China and
discuss the extent to which they can be extended to other emerging markets.
We especially compare these empirical studies with theoretical discussions
in each category, identify research gaps, and suggest future research
ideas. It focuses specifically on three categories of regulatory
institutions, including overall institutional development, liberalization
of OFDI policies, and state ownership (and its closely approximate forms).
Using a systematic review, this paper has reviewed 26 empirical studies (23
quantitative and 3 qualitative studies) published in peer-reviewed
journals. These studies suggest that overall institutional development
towards a market economy in general leads to increased OFDI, but this
effect is contingent on the stage of such development and the capabilities
of Chinese multinationals. Liberalized and supportive OFDI policies also
facilitate OFDI activities, but only into selective areas. Findings on
state ownership have been mixed. This review offers a full picture of
empirical evidence on how multiple levels of regulatory institutions affect
OFDI from China. In this way, we can identify the research gaps between theoretical
discussions on home institutions and OFDI and empirical evidence. Thus we
make suggestions for future directions of studies.
& Johnson LL. (2014). Emerging market multinationals and social
responsibility: An institutional pressure perspective (Editorial summary). Transnational
Corporations, 22(3), 1-4.
Abstract: While there is a growing body of
literature focusing on EMNEs (for reviews, see Gammeltoft, Barnard, and
Madhok, 2010; Luo and Tung, 2007; Ramamurti, 2012), many issues about these
firms’ development effects remain underexplored. It is for this reason that
we organized this special issue. The three articles that are part of this
collection highlight the most salient and pressing issues regarding EMNEs:
In what sectors and locations are EMNEs investing, and what impacts might
these investments have on sustainable development? Are EMNEs dedicating
efforts to corporate social responsibility (CSR) and if so, through what
types of activities? What is driving the firms’ engagement with CSR? And
how can and should institutions in home countries, host countries, and many
initiatives targeting MNEs – e.g., the IFC Performance Standards, the
Voluntary Principles on Security and Human Rights, and the OECD Guidelines
for Multinational Enterprises – have typically been launched and influenced
by developed countries and their firms, emerging markets and EMNEs are
increasingly playing a role; and with initiatives such as the BRICS New
Development Bank, that role will continue to expand and become even more
crucial for ensuring the contribution of international investment to
KP & Chen VZ (2014). China needs a
“going in” strategy to complement its “going out” strategy”. Columbia
FDI Perspectives, No. 121.
rising outward foreign direct investment (OFDI) faces rising skepticism
abroad. This is partly the result of the leading role of state-owned
enterprises in her OFDI (and the fear that it serves non-commercial
purposes), the speed with which this investment has grown, the negative
image of the home country in some quarters, and the challenges it poses to
established competitors. Moreover, Chinese multinational enterprises (MNEs)
may not always keep in mind that host countries see FDI as a tool to
advance their own development and hence seek maximum benefits from it.
KP & Chen VZ (2013). China’s
regulatory framework for outward foreign direct investment. China
Economic Journal, 7(1), 141-163. (Listed on Taylor
& Francis most read articles in 2014 in Social Sciences)
Abstract: China has become the world’s third largest
outward investor, behind the United States and Japan. A growing body of
literature suggests that China’s regulatory framework for outward foreign
direct investment (OFDI) is a determinant of the country’s rising OFDI.
This paper presents a holistic review of that framework, including some
possibilities for its improvement. Overall, China’s framework serves two
objectives: to help Chinese firms become more competitive internationally
and to assist the country in its development effort. In pursuing these
objectives, the regulatory framework has moved from restricting, to
facilitating, to supporting, to encouraging OFDI; but there are still
strong elements of administrative control that make it cumbersome.
State-owned enterprises (SOEs) seem to benefit particularly from the
current framework when internationalizing through FDI.
S & Chen VZ (2010). Best policy
practices for promoting inward and outward foreign direct investment.
Ottawa, Canada: Conference Board
Abstract: This report identifies and discusses best
practices to attract and promote inward and outward foreign direct
investment. To better inform Canadian policy-making at various levels of government,
this report provides an extensive and systematic review of the empirical
evidence on the public policies and other factors that influence foreign
investors. The report also evaluates which policies and other factors
affect the degree to which foreign direct investment improves productivity
and leverages other benefits in the economies receiving the investment.
[back to the top of the page]