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Navigating three vectors of power: Global strategy in a world of intense
competition, aggressive nation states, and antagonistic civil society.
Buckley (2022).............................................................................................2
The international transferability of the firm’s advantages, Hu (1995).........4
The liability of foreignness, redux; A commentary, Zaheer (2002)..............6
"Why Service and Manufacturing Entry Mode Choices Differ: The Influence
of Transaction Cost Factors, Risk and Trust" Brouthers, K. D., & Brouthers,
L. E. (2003)...................................................................................................7
The mechanism of Internationalisation, Johanson & Vahlne (1990)...........10
Managing knowledge in foreign entry strategies: a resource-based
analysis, Meyer et al. (2009)......................................................................13
Nonmarket Strategic Management, Voinea (2017)....................................16
The Iron Cage Revisited: Institutional Isomorphism and Collective
Rationality in Organizational Fields, DiMaggio and Powell (1983)..............24
Globalization and location choice: An analysis of US multinational firms in
1980 and 2000, Flores & Aguilera (2007)..................................................27
Global Cities and Multinational Enterprise Location Strategy, Goerzen et al.
(2013)........................................................................................................30
Clusters and the New Economics of Competition, Porter (1998)................32
Institutional strategy, Lawrence (1999).....................................................35
How New Market Categories Emerge: Temporal Dynamics of Legitimacy,
Identity, and Entrepreneurship in Satellite Radio, 1990–2005, Navis &
Glynn (2010)..............................................................................................37
Weight versus Voice: How Foreign Subsidiaries Gain Attention from
Corporate Headquarters, Bouquet & Birkinshaw (2008)............................40
The Rise of Emerging Market Lead Firms in Global Value Chains, Cuervo-
Cazurra & Pananond (2023).......................................................................43
What lies between market and hierarchy? Insights from internalization
theory and global value chain theory, Strange & Humphry (2018)...........45
Nonmarket Strategy Research through the Lens of New Institutional
Economics, Dorobantu et al. (2016)...........................................................47
A Review of the Nonmarket Strategy Literature: Toward a Multi-Theoretical
Integration, Mellahi et al (2015).................................................................51
,Navigating three vectors of power: Global
strategy in a world of intense competition,
aggressive nation states, and antagonistic
civil society. Buckley (2022)
Buckley (2022) provides an in-depth exploration of the complexities facing
multinational enterprises in the current global business environment. It
articulates the necessity for MNEs to adapt their strategies in response to
three primary vectors of power: state policies, civil society demands, and
market pressures.
Introduction
Buckley (2022) sets the stage by highlighting transformative changes in
the global economy, particularly in the wake of the COVID-19 pandemic
and rising geopolitical tensions. MNEs are now operating in a landscape
characterized by increased protectionism, anti-globalization sentiments,
and heightened scrutiny from various stakeholders. This environment
necessitates a revaluation of traditional global strategies, as firms must
navigate a complex web of external pressures that influence their
operations and strategic decisions.
The Three Vectors of Power
1. State Policies:
Increased: Governments have become more involved in economic
affairs, particularly during crises. This involvement includes
conditional financial support, regulatory changes, and policies aimed
at protecting national interests. For instance, governments may
impose restrictions on foreign investments or require local sourcing
of materials, which can significantly impact MNE operations.
Regulatory Complexity: MNEs must contend with a patchwork of
regulations that can vary significantly across different jurisdictions.
This complexity can create challenges in compliance and operational
efficiency, as firms must adapt their strategies to align with diverse
regulatory environments.
2. Civil Society:
Growing Activism and Accountability: The increasing influence of civil
society encompasses consumers, activists, and NGOs. These groups
are becoming more vocal in their demands for corporate
accountability, ethical practices, and sustainability. MNEs are
expected to engage with these societal expectations actively, which
can influence their brand reputation and market positioning.
Impact on Corporate Strategy: Pressures from civil society can lead to
significant changes in corporate strategies, particularly in areas such
as supply chain management, product development, and CSR
, initiatives. MNEs must not only respond to these pressures but also
anticipate them to maintain their legitimacy and competitive
advantage.
3. Market Pressures:
Intensifying Competition: The competitive landscape for MNEs is
becoming increasingly challenging, with firms facing not only
traditional market competition but also the need to adapt to non-
market strategies. MNEs must be agile and innovative to respond to
rapidly changing market conditions and consumer preferences.
Integration of Non-Market Strategies: The importance of integrating
non-market strategies into overall business plans, which includes
understanding the regulatory environment, engaging with
stakeholders, and addressing societal concerns, which can all impact
market performance and corporate reputation.
The Governance Triangle
To understand the interplay between these three vectors of power, Buckley
introduces the "governance triangle" framework. This model consists of
three key components:
Governance through Coordination: This aspect focuses on the role of
the state in regulating and coordinating economic activities. It
highlights how government policies can shape the operational
landscape for MNEs and the importance of compliance with local
regulations.
Governance through Competition: This component addresses the
market dynamics that drive corporate strategies. It emphasizes the
need for MNEs to remain competitive in an increasingly fragmented
global market, where traditional competitive advantages may no
longer suffice.
Governance through Argumentation: This element reflects the
influence of civil society and public discourse on corporate behaviour.
It underscores the necessity for MNEs to engage with societal
expectations and to be proactive in addressing the concerns of
various stakeholders.
Implications for MNEs
MNEs must recognize and navigate the complex web of constraints
imposed by these vectors of power. The implications for corporate strategy
are profound:
Radical reappraisal of strategies: MNEs are called to undertake a
radical reassessment of their global strategies, taking into account
the multifaceted pressures from governments, civil society, and
market dynamics. This may involve rethinking organizational
structures, global value chains, and non-market strategies.
Leveraging innovation and flexibility: Innovation and flexibility are
critical advantages for MNEs in this new environment. Firms that can
adapt quickly to changing circumstances and leverage innovative
, solutions will be better positioned to thrive amidst uncertainty and
competition.
Engagement with stakeholders: MNEs must prioritize engagement
with a diverse range of stakeholders, including governments, civil
society, and market participants. This engagement is essential for
building legitimacy, fostering trust, and ensuring compliance with
evolving expectations.
Conclusion
Buckley (2022) provides a comprehensive analysis of the challenges and
opportunities facing MNEs in a rapidly changing global landscape. By
articulating the significance of the three vectors of power—state policies,
civil society demands, and market pressures—Buckley (2022) underscores
the need for MNEs to adopt a more integrated and responsive approach to
their global strategies. The governance triangle framework serves as a
valuable tool for understanding the complex interactions between these
forces and guiding corporate decision-making in an increasingly
interconnected world.
The international transferability of the firm’s
advantages, Hu (1995)
Hu (1995) explores the complexities of how a firm's competitive
advantages, honed in its domestic market, may or may not transfer
successfully to foreign markets. Hu (1995) addresses why dynamic and
successful corporations often struggle when expanding abroad and why
firms with strong domestic positions may not maintain similar dominance
internationally. The central theme is understanding what constitutes a
firm's "advantages" and how these can be leveraged or lost in
international operations.
Definition and Concept of Advantages:
The concept of a firm's advantage originates from Hymer, who focused on
how firms from one country can possess advantages when operating in
another. Later scholars like Kindleberger and Dunning introduced terms
like "monopolistic advantages" and "ownership-specific advantages" to
describe these dynamics.
Competitive advantages are relative, meaning a firm's strengths depend
on its position relative to competitors in a specific context or market. What
constitutes an advantage in one country may not be valuable in another
due to differences in customers, competitors, and business environments.
Different Types of Advantages:
Hu (1995) distinguishes between various levels of advantages:
downstream advantages (e.g., superior customer service or lower prices),
upstream advantages (e.g., proprietary technology or internal efficiencies),
and dynamic advantages (e.g., the ability to innovate and learn
continuously).
Navigating three vectors of power: Global strategy in a world of intense
competition, aggressive nation states, and antagonistic civil society.
Buckley (2022).............................................................................................2
The international transferability of the firm’s advantages, Hu (1995).........4
The liability of foreignness, redux; A commentary, Zaheer (2002)..............6
"Why Service and Manufacturing Entry Mode Choices Differ: The Influence
of Transaction Cost Factors, Risk and Trust" Brouthers, K. D., & Brouthers,
L. E. (2003)...................................................................................................7
The mechanism of Internationalisation, Johanson & Vahlne (1990)...........10
Managing knowledge in foreign entry strategies: a resource-based
analysis, Meyer et al. (2009)......................................................................13
Nonmarket Strategic Management, Voinea (2017)....................................16
The Iron Cage Revisited: Institutional Isomorphism and Collective
Rationality in Organizational Fields, DiMaggio and Powell (1983)..............24
Globalization and location choice: An analysis of US multinational firms in
1980 and 2000, Flores & Aguilera (2007)..................................................27
Global Cities and Multinational Enterprise Location Strategy, Goerzen et al.
(2013)........................................................................................................30
Clusters and the New Economics of Competition, Porter (1998)................32
Institutional strategy, Lawrence (1999).....................................................35
How New Market Categories Emerge: Temporal Dynamics of Legitimacy,
Identity, and Entrepreneurship in Satellite Radio, 1990–2005, Navis &
Glynn (2010)..............................................................................................37
Weight versus Voice: How Foreign Subsidiaries Gain Attention from
Corporate Headquarters, Bouquet & Birkinshaw (2008)............................40
The Rise of Emerging Market Lead Firms in Global Value Chains, Cuervo-
Cazurra & Pananond (2023).......................................................................43
What lies between market and hierarchy? Insights from internalization
theory and global value chain theory, Strange & Humphry (2018)...........45
Nonmarket Strategy Research through the Lens of New Institutional
Economics, Dorobantu et al. (2016)...........................................................47
A Review of the Nonmarket Strategy Literature: Toward a Multi-Theoretical
Integration, Mellahi et al (2015).................................................................51
,Navigating three vectors of power: Global
strategy in a world of intense competition,
aggressive nation states, and antagonistic
civil society. Buckley (2022)
Buckley (2022) provides an in-depth exploration of the complexities facing
multinational enterprises in the current global business environment. It
articulates the necessity for MNEs to adapt their strategies in response to
three primary vectors of power: state policies, civil society demands, and
market pressures.
Introduction
Buckley (2022) sets the stage by highlighting transformative changes in
the global economy, particularly in the wake of the COVID-19 pandemic
and rising geopolitical tensions. MNEs are now operating in a landscape
characterized by increased protectionism, anti-globalization sentiments,
and heightened scrutiny from various stakeholders. This environment
necessitates a revaluation of traditional global strategies, as firms must
navigate a complex web of external pressures that influence their
operations and strategic decisions.
The Three Vectors of Power
1. State Policies:
Increased: Governments have become more involved in economic
affairs, particularly during crises. This involvement includes
conditional financial support, regulatory changes, and policies aimed
at protecting national interests. For instance, governments may
impose restrictions on foreign investments or require local sourcing
of materials, which can significantly impact MNE operations.
Regulatory Complexity: MNEs must contend with a patchwork of
regulations that can vary significantly across different jurisdictions.
This complexity can create challenges in compliance and operational
efficiency, as firms must adapt their strategies to align with diverse
regulatory environments.
2. Civil Society:
Growing Activism and Accountability: The increasing influence of civil
society encompasses consumers, activists, and NGOs. These groups
are becoming more vocal in their demands for corporate
accountability, ethical practices, and sustainability. MNEs are
expected to engage with these societal expectations actively, which
can influence their brand reputation and market positioning.
Impact on Corporate Strategy: Pressures from civil society can lead to
significant changes in corporate strategies, particularly in areas such
as supply chain management, product development, and CSR
, initiatives. MNEs must not only respond to these pressures but also
anticipate them to maintain their legitimacy and competitive
advantage.
3. Market Pressures:
Intensifying Competition: The competitive landscape for MNEs is
becoming increasingly challenging, with firms facing not only
traditional market competition but also the need to adapt to non-
market strategies. MNEs must be agile and innovative to respond to
rapidly changing market conditions and consumer preferences.
Integration of Non-Market Strategies: The importance of integrating
non-market strategies into overall business plans, which includes
understanding the regulatory environment, engaging with
stakeholders, and addressing societal concerns, which can all impact
market performance and corporate reputation.
The Governance Triangle
To understand the interplay between these three vectors of power, Buckley
introduces the "governance triangle" framework. This model consists of
three key components:
Governance through Coordination: This aspect focuses on the role of
the state in regulating and coordinating economic activities. It
highlights how government policies can shape the operational
landscape for MNEs and the importance of compliance with local
regulations.
Governance through Competition: This component addresses the
market dynamics that drive corporate strategies. It emphasizes the
need for MNEs to remain competitive in an increasingly fragmented
global market, where traditional competitive advantages may no
longer suffice.
Governance through Argumentation: This element reflects the
influence of civil society and public discourse on corporate behaviour.
It underscores the necessity for MNEs to engage with societal
expectations and to be proactive in addressing the concerns of
various stakeholders.
Implications for MNEs
MNEs must recognize and navigate the complex web of constraints
imposed by these vectors of power. The implications for corporate strategy
are profound:
Radical reappraisal of strategies: MNEs are called to undertake a
radical reassessment of their global strategies, taking into account
the multifaceted pressures from governments, civil society, and
market dynamics. This may involve rethinking organizational
structures, global value chains, and non-market strategies.
Leveraging innovation and flexibility: Innovation and flexibility are
critical advantages for MNEs in this new environment. Firms that can
adapt quickly to changing circumstances and leverage innovative
, solutions will be better positioned to thrive amidst uncertainty and
competition.
Engagement with stakeholders: MNEs must prioritize engagement
with a diverse range of stakeholders, including governments, civil
society, and market participants. This engagement is essential for
building legitimacy, fostering trust, and ensuring compliance with
evolving expectations.
Conclusion
Buckley (2022) provides a comprehensive analysis of the challenges and
opportunities facing MNEs in a rapidly changing global landscape. By
articulating the significance of the three vectors of power—state policies,
civil society demands, and market pressures—Buckley (2022) underscores
the need for MNEs to adopt a more integrated and responsive approach to
their global strategies. The governance triangle framework serves as a
valuable tool for understanding the complex interactions between these
forces and guiding corporate decision-making in an increasingly
interconnected world.
The international transferability of the firm’s
advantages, Hu (1995)
Hu (1995) explores the complexities of how a firm's competitive
advantages, honed in its domestic market, may or may not transfer
successfully to foreign markets. Hu (1995) addresses why dynamic and
successful corporations often struggle when expanding abroad and why
firms with strong domestic positions may not maintain similar dominance
internationally. The central theme is understanding what constitutes a
firm's "advantages" and how these can be leveraged or lost in
international operations.
Definition and Concept of Advantages:
The concept of a firm's advantage originates from Hymer, who focused on
how firms from one country can possess advantages when operating in
another. Later scholars like Kindleberger and Dunning introduced terms
like "monopolistic advantages" and "ownership-specific advantages" to
describe these dynamics.
Competitive advantages are relative, meaning a firm's strengths depend
on its position relative to competitors in a specific context or market. What
constitutes an advantage in one country may not be valuable in another
due to differences in customers, competitors, and business environments.
Different Types of Advantages:
Hu (1995) distinguishes between various levels of advantages:
downstream advantages (e.g., superior customer service or lower prices),
upstream advantages (e.g., proprietary technology or internal efficiencies),
and dynamic advantages (e.g., the ability to innovate and learn
continuously).
