Multinational enterprises have become a main engine of the global economy, technical advancement, and product innovation, playing a pivotal role in the world economy and the global technological revolution. However, MNEs are also often embroiled in financial fraud and corporate scandal which show that MNEs should improve their corporate governance. Meanwhile, as COVID- 19 runs rampant across the world, populism and deglobalisation have resurged, and protectionism and unilateralism are exerting negative impacts on the world economy. Achieving sustainable development in this context is a test of a company’s management and governance abilities. How should they be governed? This book will be a useful tool for university research-led teaching and fundamental research in corporate governance theories of MNEs in general, as well as using Chinese case studies as evidence to support our theoretical arguments.
Author(s): Runhui Lin, Jean Jinghan Chen
Publisher: Palgrave Macmillan
Year: 2022
Language: English
Pages: 203
City: Singapore
Acknowledgements
Contents
List of Figures
List of Tables
1 Introduction
References
2 MNEs and Multinational Corporate Governance
2.1 MNE Development and Theoretical Research
2.1.1 The Emergence and Development of MNEs
2.1.1.1 Chartered Companies
2.1.1.2 Modern MNEs
2.1.1.3 New-Era MNEs
2.1.2 Theoretical Research into MNEs
2.2 Overview of Corporate Governance Studies
2.2.1 Corporate Governance—Theoretical Framework and Essential Issues
2.2.1.1 System of Concepts
2.2.1.2 Theoretical Framework
2.2.2 Traditional Corporate Governance Versus Multinational Corporate Governance
2.3 Multinational Corporate Governance—Connotations and Research Progress
2.3.1 Connotations
2.3.2 The Necessity of Multinational Corporate Governance Studies
2.3.3 Institutional Factors Affecting Multinational Corporate Governance
2.3.4 Main Topics in Multinational Corporate Governance Studies
2.3.4.1 Impact of Host Country Institutional Environment on the Governance of Foreign Subsidiaries
2.3.4.2 Evolution of the Role of Subsidiaries and Their Governance Models
2.3.4.3 Interstate Relations and Multinational Corporate Governance
2.3.4.4 Institutional Distance and Multinational Corporate Governance
References
3 Theoretical Framework for Multinational Corporate Governance
3.1 Theories Related to the Studies of Multinational Corporate Governance
3.1.1 Theories Related to Corporate Governance Studies
3.1.1.1 Agency Theory
3.1.1.2 Stewardship Theory
3.1.1.3 Stakeholder Theory
3.1.1.4 Institutional Theory
3.1.2 Theories Related to MNE Studies
3.2 Characteristics of Multinational Corporate Governance
3.2.1 Network Governance Attributes
3.2.2 Extended Agency Chain
3.2.3 Expanded Connotations of Internal and External Governance
3.2.4 Cultural Dominance in Multinational Corporate Governance
3.3 Basic Theories and Framework for Multinational Corporate Governance
3.3.1 Stakeholder Theory
3.3.2 Agency Theory
3.3.3 Institutional Design Theory
3.3.4 Decision-Making Theory
3.3.5 Network Governance Theory
References
4 Multinational Corporate Governance: A Network Governance Framework
4.1 MNE Network Node Governance
4.1.1 Parent Company Governance
4.1.1.1 Governance of the Parent company’s Board of Directors
4.1.1.2 Parent Company Equity Governance
4.1.1.3 Governance of Parent Company Executives
4.1.2 Foreign Subsidiary Governance
4.1.2.1 Governance of Subsidiary Boards of Directors
4.1.2.2 Foreign Subsidiary Ownership Governance
4.1.2.3 Foreign Subsidiary Top Management Governance
4.2 MNEs Network Relationship Governance: Parent-Subsidiary Relationship Governance
4.2.1 Parent Company Strategy and Parent-Subsidiary Governance
4.2.2 Parent Company Control and Subsidiary Ownership Governance
4.3 MNEs External Network Governance
4.3.1 Host Country Institutional and Cultural Influences on Foreign Subsidiary Governance
4.3.2 Influence of Host Country Stakeholders on MNEs
4.4 Multinational Corporate Governance: An Integrated Network Governance Framework
References
5 Foreign Subsidiary Governance
5.1 Internal Governance of Foreign Subsidiaries of MNEs
5.1.1 Board Governance
5.1.1.1 From the Perspective of Agency Theory
5.1.1.2 From the Perspective of Resource Dependence Theory
5.1.1.3 From the Resource-Based Perspective
5.1.2 Equity Governance
5.1.2.1 From the Perspective of Transaction Cost Theory
5.1.2.2 From the Perspective of Institutional Theory
5.1.2.3 From Multi-theoretical Perspective
5.1.3 Senior Management Governance
5.2 Parent-Subsidiary Relationship Governance
5.2.1 Parent-Subsidiary Relationship Governance of MNEs in Developed Countries
5.2.1.1 Parent-Subsidiary Relationship Governance and the Strategic Role of Foreign Subsidiaries
5.2.1.2 Parent-Subsidiary Relationship Governance of MNEs Based on Agency Theory, the Knowledge-Based View, and Social Interaction Theory
5.2.2 Parent-Subsidiary Relationship Governance of MNEs in Emerging Markets
5.3 External Governance of Foreign Subsidiaries
5.3.1 How Host Country Stakeholders Affect Foreign Subsidiaries
5.3.2 How Host Countries’ Institutions and Cultures Affect Foreign Subsidiaries
References
6 Institutional Distance, Cultural Distance, and MNEs Governance
6.1 Factors Influencing MNEs Governance
6.1.1 Influencing Factors of MNEs Governance at the Macro Level
6.1.2 Influencing Factors of MNEs Governance at the Meso-Level
6.1.3 Influencing Factors of MNEs Governance at the Micro-Level
6.2 Institutional Distance and MNEs Governance
6.2.1 Institutional Distance and Host Country Selection
6.2.2 Institutional Distance and Choice of Entry Mode by Foreign Subsidiaries
6.2.3 Institutional Distance and the Legitimacy of Foreign Subsidiaries
6.3 Cultural Distance and MNEs Governance
6.3.1 Cultural Distance and the Choice of Host Country
6.3.2 Cultural Distance and the Choice of Foreign Market Entry Mode
6.3.3 Cultural Distance and the Legitimacy of Foreign Subsidiaries
References
7 The Institutional Gap and Chinese MNEs Governance
7.1 The Institutional Gap
7.1.1 Conceptual Role of the Institutional Gap
7.1.2 Connotations of the Institutional Gap
7.1.2.1 A Dichotomous View of Institutional Distance
7.1.2.2 A Trichotomous View of Institutional Distance
7.2 Institutional Gap and MNEs Governance
7.2.1 Institutional Deficit and MNEs Governance
7.2.1.1 Location Selection for OFDI
7.2.1.2 Host Country Selection
7.2.1.3 Choice of Equity Entry Mode
7.2.2 Institutional Surplus and MNEs Governance
7.2.2.1 Location Selection for OFDI
7.2.2.2 Host Country Selection
7.2.2.3 Choice of Equity Entry Mode
7.2.3 Institutional Similarity and MNEs Governance
7.3 The Institutional Gap and the Governance of Equity Ownership in Foreign Subsidiaries of Chinese MNEs
7.3.1 Formal Institution Deficit and the Governance of Equity Ownership in Foreign Subsidiaries of Chinese MNEs
7.3.2 Formal Institutional Surplus and the Governance of Equity Ownership in Foreign Subsidiaries of Chinese MNEs
7.3.3 Informal Institutional Differences and the Governance of Equity Ownership in Foreign Subsidiaries of Chinese MNEs
7.3.4 Host Country Institutions, the Institutional Gap, and the Governance of Equity Ownership in Foreign Subsidiaries of Chinese MNEs
7.3.5 Diversification Strategy, the Institutional Gap, and the Governance of Equity Ownership in Foreign Subsidiaries of Chinese MNEs
7.4 The Institutional Gap and Market Performance of Chinese Overseas Listed Companies
7.4.1 Political Connections and Enterprise Value on IPO
7.4.2 Moderating Effect of the Institutional Environment on the Relationship Between Political Connections and Enterprise Value on IPO
7.4.3 Comparing Investors in Foreign and Domestic Markets on Their Sensitivity to the Relationship Between Political Connections and Enterprise Value on IPO
References
8 Governance Structure and Mechanism of Chinese MNEs
8.1 Governance Structure of Chinese MNEs
8.1.1 Rights and Interests of Controlling Shareholders and Minority Shareholders
8.1.2 Board of Directors
8.1.3 Managers and Executive Pay
8.1.4 Stakeholders
8.2 Governance Mechanism of Chinese MNEs
8.2.1 Internal Governance Mechanism of Chinese MNEs
8.2.2 External Governance Mechanism of Chinese MNEs
References
9 Path and Characteristics of the Multinational Governance of Chinese Enterprises
9.1 Process and Theoretical Development of China’s Multinational Corporate Governance
9.1.1 Process of China’s Multinational Corporate Governance
9.1.1.1 The Role of Government
9.1.1.2 The Role of Companies
9.1.2 Theoretical Development of Multinational Governance
9.2 Evolution of China’s Multinational Corporate Governance
9.2.1 Development of Drivers of International Business
9.2.2 Changes in the Host Country Selection
9.2.3 Changes in the Entry Modes
9.2.4 Change of Parent-Subsidiary Governance Mode
9.2.5 Development of Governance Structures
References
10 Conclusions
10.1 Multinational Corporate Governance Theories: Predecessors and Developments
10.2 Network-Based Analytical Framework for Multinational Corporate Governance Studies
10.3 Two Key Issues in Multinational Corporate Governance
10.4 Experience of and Aspirations for China’s Multinational Corporate Governance Practices
References
