IMS 7301 Ph.D.

Seminar in International Business Fall, 2011

Instructor: Professor Seung-Hyun Lee Monday 1:00 3:45 SOM 2.901 Office Number: SOM 4.409 Tel: 972-883-6267 e-mail: lee.1085@utdallas.edu Office hours: by appointment.

Course Description: This course is designed to provide a strong foundation for critical thinking in the area of international business. This course will be run as a seminar examining theories and empirical studies in international business. The course will be inter-disciplinary. Many non-technical economics and finance articles are included in the reading list. To avoid overlap with the International Management course taught by Professor Jane Salk, this seminar will not cover topics such as MNC structure, alliances, and culture.

Session coordination and integration: One student volunteer will act as an integrator for each session. The student assigned as the 'integrator' for a session will not be required to turn in a paper summary for that session. Research Project: Each student will be required to present a research proposal on September 26st (bring PPT slides and 2-3 page single spaced proposal) before the class and research paper by December 5th. The research project will involve writing a major publishable paper focusing in IB/IM issues. The research paper should be an empirical paper around 20 - 25 pages long plus references. It is going to be an empirical paper without data and results sections even though it is encouraged to include empirical analyses (especially for the second years). The format required by the Academy of Management Journal is recommended. You will need to read beyond the readings in the syllabus to write a research paper. Ideally, you may work on the empirical side of the paper during the winter break and send it to major conferences such as Academy of International Business or Academy of Management. Project already underway can be extended as a research paper for the class. The topic of the research paper is not limited to the topics we cover in class. However, the research paper has to have international dimensions. Collaboration with your colleagues in writing research projects is discouraged to minimize freeriding problems. Project underway with faculty member(s) is valid for a research paper.

** Late paper will not be accepted **

Research Project Presentation: On December 5th, all students are required to present his or her research paper in front of the class. Each student will have 15 minutes for presentation and 5 minutes for Q & A following the Academy of Management presentation convention. Structure and Responsibilities: To encourage learning, students are expected to actively participate in class discussions. You should read all required readings before the class time. Basic readings are for those who do not have enough background to understand the required readings. You should be ready to talk about the main message, methodological sophistication, and possible extension of the papers under required readings. Each week, a specific paper on which they will lead the class discussion will be individually assigned. A one to two page (typed, single spaced) critical summary of the assigned paper will be required from each student, before class (Bring enough paper summaries to the class to distribute to all the participants). The summary should include: 1. 2. 3. 4. What is the main research question of the paper? Is this an important question? What are the assumptions in the paper? Are they valid? Why or why not? What is the possible way of extension? How would you proceed? How would you position the article among the assigned readings or in the field?

The integrator will first briefly tie together the day's readings and place them in the context of the field. Then the integrator will facilitate discussions for each paper. Occasionally the instructor may give quizzes for the assigned readings of the class at the beginning of the class. Not all the quizzes will be graded. However, some of them will be graded and will count toward the course grades.

Readings: Required readings are attached to this syllabus. You must come to each class after thoroughly reading all the required readings. Basic readings are for those who do not have background knowledge for the topics. Recommended readings are for those who want to pursue more into the topics. Most readings can be downloaded from library search engines such as JSTOR or Business Source Premier. They are also available for copying from the instructor. Evaluation:

Your final grade will be determined as follows. Research paper: 50% Attendance, coming late to classes, and class participation: 20% Research proposal: 10% Class quizzes: 20%

1. International Business and Institutions (8/29/11) Integrator: Seung-Hyun Lee Required readings: Cheng, J. 1994. Notes: On the concept of universal knowledge in organizational science: Implications for cross-national research, Management Science, 40(1): 162-168. Shenkar, O. and M. von Glinow, 1994. Paradoxes of organizational theory and research: Using the case of China to illustrate national contingency. Management Science, 40(1): 56-71. North, D. 1990. Institutions, institutional change, and economic performance. Cambridge: Harvard University Press. (Chapter 1) Raghuram Rajan & Luigi Zingales. 2004. Saving Capitalism from the Capitalists (Chapter 1) 9/5/11 Labor day (no class) 2. Institutional Differences and Institutional Change (9/12/11) Integrator:_______________ Required readings: Rajan, R., & Zingales, L. 2003. The great reversals: The politics of financial development in the 20th century. Journal of Financial Economics, 69(1): 5-50. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. 1997. Legal determinants of external finance. Journal of Finance, 52: 1131-1150. Greenwood, R., & Hinings, C. R. 1996. Understanding radical organizational change: Bringing together the old and the new institutionalism. Academy of Management Review, 21: 1022-1054. Khanna, T., & Rivkin, J. 2001. Estimating the Performance Effects of Business Groups in Emerging Markets. Strategic Management Journal, 22: 45-74. Del Sol, P., & Kogan, J. 2007. Regional competitive advantage based on pioneering economic reforms: the case of Chilean FDI. Journal of International Business Studies, 38: 901-927. Recommended Readings: Newman, K. 2000. Organizational transformation during institutional upheaval. Academy of Management Review, 25: 602-19

Rajan, R., & Zingales, L. 1998. Financial dependence and growth. American Economic Review, 88: 559-586 Stulz, R., & Williamson, R. 2003. Culture, openness, and finance. Journal of Financial Economics, forthcoming. Biggart, N., & Guillen, M. 1999. Developing Difference: Social Organization and the Rise of the Auto Industries of South Korea, Taiwan, Spain, and Argentina. American Sociological Review, 64(5):722-747. DiMaggio, P., & Powell, W. 1991. Introduction. In Powell W, DiMaggio P. (eds.). The new institutionalism in organizational analysis. Chicago: University of Chicago Press. Zucker, L. G. 1988. Where do institutional patterns come from? Organizations as actors in social systems, In L. G. Sucker (Ed.), Institutional patterns and organizations: Culture and environment: 23-49. Cambridge, MA: Ballinger Scott, R. 2001. Institutions and Organizations, Sage. (1995 version is also doable)

3. Industry and Competition (9/19/11) Integrator:_______________ Required readings: Hanssens, D., & Johansson, J. 1991. Rivalry as synergy? The Japanese automobile companies' export expansion. Journal of International Business Studies, 22(3): 503-526. Martin, X., Mitchell, W., & Swaminathan, A. 1995. Recreating and extending Japanese automobile links in North America. Strategic management Journal, 16: 589-619. Nohria, N., & Garcia-Pont, C. 1991. Global strategic linkages and industry structure. Strategic Management Journal, 12: 105-124. Ito, K. 1997. Domestic competitive position and export strategy of Japanese manufacturing firms: 1971-1985. Management Science, 43(5): 610-622. Sakakibara, M., & Porter, M. 2001. Competing at home to win abroad: evidence from Japanese industry, Review of Economics and Statistics, 83(2)-311-322. Yu, T., & Cannella, A. 2009. Rivalry deterrence in international markets: Contingencies governing the mutual forbearance hypothesis. Academy of Management Journal, 52: 127-147.

Lee, S.-H., Beamish, P., Lee, H., & Park, J. 2009. Strategic Choice during Economic Crisis: Domestic Market Position, Organizational Capabilities and Export Flexibility, Journal of World Business, 44: 1-15.

Recommended Readings: Scherer, F. M. 1980. The price and profit consequences of market structure. In Industrial Market Structure and Economic Performance (2nd ed.). Chicago: Rand McNally, Chapter 9. Martin, X., Swaminathan, A., & Mitchell, W. 1995. Organizational evolution in the interorganizational environment: Incentives and constraints on international expansion strategy. Administrative Science Quarterly, 43: 566-601. Teece, D. 1985. Multinational enterprise, internal governance, and industrial organization. American Economic Review, 75: 233-238. Porter, M. 1979. The structure within industries and companies' performance. Economics and Statistics, 61, 214-227. Review of

Caves R. 1998. Industrial organization and new findings on the turnover and mobility of firms. Journal of Economic Literature 36: 1947-1982. Knickerbocker, F. 1973. Oligopolistic reaction and the multinational enterprise. Harvard Univeristy Press. Cambridge, MA. Mascarenhas, B. 1992. Order of entry and performance in international markets. Strategic Management Journal, 13: 499-510. Hennart, J., & Park, Y-R. 1994. Location, governance, and strategic determinants of Japanese manufacturing investments in the United States. Strategic Management Journal, 15: 419-436. Basic Readings: Caves, R.E. 1980. Industrial organization, corporate strategy and structure. Journal of Economic Literature, 18: 64-92. Porter, M. 1981. The contributions of industrial organization to strategic management. Academy of Management Review, 6, 4, 609-620. Caves, R., & Porter, M. 1977. From entry barriers to mobility barriers: Conjectual decisions and contrived deterrence to new competition. Quarterly Journal of Economics, 91: 241.262. 4. Internalization/ Transaction Cost Economics (9/26/11) research proposal due

* discussion on the research proposal will also take place during class. (so we will have short list of readings for this day). Integrator:_______________ Required readings:

Anderson, E. and H. Gatignon. 1986. Modes of foreign entry: A transaction cost analysis and propositions. Journal of International Business Studies, 17: 1-26. Hill, C., & Kim, W. 1988. Searching for a dynamic theory of the multinational enterprise: A transaction cost model. Strategic Management Journal, 9: 93-104. Recommended Readings: Hennart, J., & Park, Y-R. 1993. Greenfield vs. acquisition: The strategy of Japanese investors in the United States. Management Science, 39: 1054-1070. Hill, C., P. Hwang, and W. C. Kim (1990). An eclectic theory of the choice of international entry mode. Strategic Management Journal, 9: 93-104. Klein, B.,Crawford, R., & Alchian, A. 1978. Vertical Integration, Appropriable Rents, and the Competitive Contracting Process. The Journal of Law and Economics, 297-326. Ouchi, W. 1980. Markets, Bureaucracies, and Clans. Administrative Science Quarterly, 25, 129141. Alchian, A., & Demsetz, H. 1972. Production, Information Costs, and Economic Organization. The American Economic Review, 62, 777-795. Buckley, P. and M. Casson (1998). Analyzing foreign market entry strategies: Extending the internalization approach. Journal of International Business Studies, 29: 539-562

Teece, D. 1986. Transactions cost economics and the multinational enterprise: An assessment. Journal of Economic Behavior & Organization, 7: 21-45. Chang, S., & Choi, U. 1988. Strategy, Structure, and Performance of Korean Business Group: A Transactions Cost Approach, Journal of Industrial Economics, 37(2): 141-158. Williamson, O. 1996. Economic Organization: The Case for Candor. Academy of Management Review, 21, 1, 48-57.

Rugman, A., & Verbeke, A. 1992. A note on the transactional solution and the transaction cost theory of multinational strategic management. Journal of International Business Studies, 23: 761-771. Ito, K. 1995. Japanese spinoffs: Unexplored survival strategies. Strategic Management Journal, 16(6): 431-446. Basic Readings: Coase, R. 1937. The Nature of the Firm. Economica, 4, 386-405. Williamson, O. 1979. Transaction Cost Economics: The Governance of Contractual Relations. Journal of Law and Economics, 22, 233-261.

5. Resource-based View (10/3/11) Integrator:_______________ Required readings:

Morck, R., & Yeung, B. 1991. Why investors value multinationality. Journal of Business, 64(2): 165-187. Makhija, M. 2003. Comparing the resource-based and market-based views of the firm: Empirical evidence from Czech Privatization. Strategic Management Journal, 24 (5): 433 - 451 Guillen, M. 2000. Business groups in emerging economies: A resource-based view. Academy of Management Journal, 43: 362-380. Berry, H. 2006. Shareholder valuation of foreign investment and expansion. Strategic Management Journal, 27: 1123-1140. Chang, Sea Jin, 1995, International expansion strategy of Japanese firms: Capability building through sequential entry, Academy of Management Journal, vol. 38, no. 2, 383-407 Recommended readings: Kogut, B., & Chang, S. 1991. Technological capabilities and Japanese foreign direct investment in the United States. Review of Economics and Statistics, 12: 33-47. Conner, K. 1991. An historical comparison of resource-based theory and five schools of thought within industrial organization economics: Do We Have a New Theory of the Firm Here? Journal of Management, 17, 121-154.

Barkema, H., & Vermuelen, F. 1998. International expansion through start-up or acquisition: A learning perspective. Academy of Management Journal, 41(1): 7-26. Tallman, S. 1991. Strategic management models and resource-based strategies among MNEs in a host market. Strategic Management Journal, 12: 69-82. Chang, S., & Xu, D. 2008. Spillover and competition among foreign and local firms in China, Strategic Management Journal, 29: 495-518. Almeida, P. 1996. Knowledge sourcing by foreign multinationals: Patent citation analysis in the U.S. semiconductor industry. Strategic Management Journal, 17: 155-165. Kogut, B. 1991. Country capabilities and the permeability of borders. Strategic Management Journal, 12: 33-47. Penrose, E.T. 1959. The Theory of the Growth of the Firm. Oxford: Blackwell, 1-87. Basic readings: Lippman, S. and R. Rumelt. 1982. Uncertain imitability: An analysis of interfirm differences in efficiency under competition. Bell Journal of Economics, 13, 418-438. Barney, J. 1986. Strategic factor markets: Expectations, luck, and business strategy. Management Science, 32, 1231-1241. Barney, J. 1991. Firm resources and sustained competitive advantage. Journal of Management, 17, 1, 99-120. Wernerfelt, B. 1984. A resource-based view of the firm. Strategic Management Journal, 5, 171180. Dierickx, I. and K. Cool. 1989. Asset stock accumulation and sustainability of competitive advantage. Management Science, 35, 1504-1511. Peteraf, M. 1993. The cornerstones of competitive advantage: A resource-based view. Strategic Management Journal, 14, 179-192. Amit, R. and P. Schoemaker. 1993. Strategic assets and organizational rent. Management Journal, 14, 33-46. Strategic

Godfrey, P. C. and C. W. L. Hill. 1995. The problem of unobservables in strategic management research. Strategic Management Journal, 16, 519-533.

6. Real Options and Operational Flexibility (10/10/11)

Integrator:_______________ Required readings:

Kogut B, Kulatilaka N. 1994. Operating flexibility, global manufacturing, and the option value of a multinational network. Management Science 40: 123-139. Belderbos, R., & Zou, J. 2009. Real options and foreign affiliate divestments: A portfolio perspective. Journal of International Business Studies, 40: 600- 620. Chung, C., Lee, S.-H., Beamish, P., & Isobe, T. 2009. Subsidiary expansion/contraction during times of economic crisis. Journal of International Business Studies, 41: 500-516. Rangan S. 1998. Do multinationals operate flexibly? Theory and evidence, Journal of International Business Studies 29(2): 217-237. Lee S.-H. & Makhija, M. 2009. The effect of domestic uncertainty on the real options value of international investments. Journal of International Business Studies. 40: 405-420. Lee, S.-H., & Makhija, M. 2009. Flexibility in internationalization: is it valuable during an economic crisis? Strategic Management Journal, 30: 537-555. Lee, S.-H., & Song, S. 2011. Exchange Rate Volatility, Shift of Production, and Operational Flexibility in Foreign Direct Investment: The Case of Korean Firms at Strategic Management Journal, forthcoming Recommended Readings: Allen L, Pantzalis C. 1996. Valuation of the operating flexibility of multinational corporations, Journal of International Business Studies 27: 633-653. Henderson R, Clark K. 1990. Architectural innovation: The reconfiguration of existing product technologies and the failure of established firms. Administrative Science Quarterly 35(1): 9-30. Chang, Sea Jin, 1995, International expansion strategy of Japanese firms: Capability building through sequential entry, Academy of Management Journal, vol. 38, no. 2, 383-407 Chang, Sea Jin, 1996, An evolutionary perspective on diversification and corporate restructuring: Entry, exit, and economic performance during 1981-89, Strategic Management Journal, vol. 17, 587-611 Chang S, Rosenzweig P. 2001. The choice of entry mode in sequential foreign direct investment. Strategic Management Journal 22: 747-776.

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Kogut B, Kulatilaka N. 1994b. Options thinking and platform investments: Investing in opportunity. California Management Review 36(2): 52-71. Kogut B, Kulatilaka N. 2001. Capabilities as real options. Organization Science 12: 744-758. Campa, J. 1994. Multinational investment under uncertainty in the chemical processing industries, Journal of International Business Studies, Third Quarter: 557-578. Tang C, Tikoo S. 1999. Operational flexibility and market valuation of earnings. Strategic Management Journal 20: 749-761. Jing Li & Yong Li. 2010. Flexibility versus commitment: MNEs' ownership strategy in China. Journal of International Business Studies. 41: 1550-1571. Cuypers, I., & Martin, X. 2010. What makes and what does not make a real option? A study of equity shares in international joint venture. Journal of International Business Studies, 41: 47-69.

Basic Readings: Dixit A, Pindyck R. 1994. Investment under uncertainty. Princeton University Press: Princeton, NJ. (Chapter 1) McGrath R. G. 1999. Falling forward: Real options reasoning and entrepreneurial failure. Academy of Management Review 24: 13-30. Bowman E, Hurry D. 1993. Strategy through the option lens: An integrated view of resource investments and the incremental-choice process. Academy of Management Review 18:760-782.

7. Political Connection and Government (10/17/11) Integrator:_______________ Required readings: Fisman, R. 2001. Estimating the value of political connections. American Economic Review, 91: 1095-1102. Lenway S, Morck R, Yeung B. 1996. Rent seeking, protectionism and innovation in the American steel industry. The Economic Journal 106: 410-421. Faccio, M., Masulis, R., McXonnel, J. 2006. Political connections and corporate bailouts. Journal of Finance, 61: 2597-2635.

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Feinberg, S., & Gupta, A. 2009. MNC subsidiaries and country risk: Internalization as safeguard against weak external institutions. Academy of Management Journal, 52: 381-399. Milner, H., & Yoffie, D. 1989. Between free trade and protectionism: Strategic trade policy and a theory of corporate trade demands. International Organization, 43 (2): 239-272. Lee, S.-H., & Baik, Y. 2010. Corporate lobbying and injury claims in antidumping cases: Looking into the Continued Dumping and Subsidy Offset Act. Journal of Business Ethics, 96: 467-478

Recommended Readings: Garcia-Canal, E., & Guillen, M. 2008. Risk and the strategy of foreign location choice in regulated industries. Strategic Management Journal, 29: 1097-1115. Makhija, M. 1993. Government intervention in the Venezuelan petroleum industry: An empirical investigation of political risk. Journal of International Business Studies, 24(3): 531-555. Anderson, J.1992. Domino dumping, 1: Competitive exporters. American Economic Review, March: 65-83. Hanson, B. 1998. What happened to fortress Europe? External trade policy liberalization in the European Union. International Organization, 52(1): 55-85. Evans, P. 1995. Embedded autonomy: States and industrial transformation. Princeton: Princeton University Press. Wells, L. (1998). Multinationals and the developing countries. Journal of International Business Studies, 29: 101-114. Murtha, T., & Lenway, S. 1994. Country capabilities and the strategic state: How national political institutions affect multinational corporations strategies. Strategic Management Journal, 15: 113-29. Ramamurti R. 2001. The obsolescing bargaining model? MNC-host developing country relations revisited. Journal of International Business Studies 32: 23-39. Loree D, Guisinger S. 1995. Policy and non-policy determinants of U.S. equity foreign direct investment. Journal of International Business Studies 26: 281-299. Brahm R. 1995. National targeting policies, high-technology industries, and excessive competition. Strategic Management Journal 16: 71-91. Brewer, T. L. 1993. Government policies, market imperfections, and foreign direct investment. Journal of International Business Studies, 24(1): 101-120

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Boddewyn, J. J. & Brewer, T. L. 1994. International-business political behavior: New theoretical direction, Academy of Management Journal, 19(1): 119-143. 8. Environmental Uncertainty and FDI (10/24/11) Integrator:_______________ Required readings: Beaulieu, M., Cosset, J., & Essaddam, N. 2005. The impact of political risk on the volatility of stock returns: The case of Canada. Journal of International Business Studies, 36(6), 701-18 Rivoli, P., & Salorio, E. 1996. Foreign direct investment and investment under uncertainty. Journal of International Business Studies, 27: 335-357. Fisch, J. 2008. Investment in new foreign subsidiaries under receding perception of uncertainty. Journal of International Business Studies, 39: 370-386. Hurry, Dileep, 1993, Restructuring in the global economy: The consequences of strategic linkages between Japanese and U.S. firms, Strategic Management Journal, vol. 14, 69-82. Kogut, B. 1991. Joint ventures and the option to expand and acquire. Management Science, 37: 19-33. Reuer J, Leiblein M. 2000. Downside risk implications of multinationality and international joint ventures, Academy of Management Journal 43: 203-214. Matsusaka, J. 2001. Corporate Diversification, Value Maximization, and Organizational Capabilities, Journal of Business. 74: 409-431. 9. Research project presentation by current students (10/31/11) tentative Omer Gokalp Sungjin Hong 10. International Entrepreneurship (11/7/11) Presentation of their research by Sungjin Hong and Omer Gokalp 11. Institutional Distance (11/14/11) Integrator:_______________ Required readings: 13

Westney E. 1993. Institutionalization Theory and the MNE. In S. Ghoshal and E. Westney (eds.) Organization Theory and the Multinational Corporation, St Martins Press: New York, pp: 5376. Kostova T, Roth K. 2002. Adoption of an organizational practice by subsidiaries of multinational corporations: Institutional and relational effects. Academy of Management Journal 45: 215233. Kostova T, Zaheer S. 1999. Organizational legitimacy under conditions of complexity: The case of the multinational enterprise. Academy of Management Review 24: 6481. Eden L, Miller S. 2004. Distance matters: Liability of foreignness, institutional distance and ownership strategy. Theories of the Multinational Enterprise: Diversity, Complexity, and Relevance. Advances in International Management 16: 187-221. Hillman, A,, & Wan, W. 2005. The determinants of MNE subsidiaries political strategies: Evidence of institutional duality. Journal of International Business Studies, 36: 322-340.

12. Corruption (11/21/11) Shleifer, A. 1993. Corruption. Quarterly Journal of Economics, 108: 599-617. Svensson, J. 2003. Who must pay bribes and how much? Evidence from a cross section of firms. Quarterly Journal of Economics, 118: 207-230. Rodriguez, P., Uhlenbruk, K., & Eden, L. 2005. Government corruption and the entry strategies of multinationals. Academy of Management Review, 30: 383-396. Lee, S., Oh, K., & Eden, L. 2009. Why Do Firms Bribe? Insights from Residual Control Theory into Firms' Exposure and Vulnerability to Corruption, Management International Review, 50: 775-796. Cuervo-Cazurra, A. 2006. Who cares about corruption? Journal of International Business Studies, 37: 807-822. Fisman, R., & Miguel, E. 2007. Corruption, Norms, and Legal Enforcement: Evidence from Diplomatic Parking Tickets. Journal of Political Ecnomy, 115: 1020-1048. 13. Research project preparation (11/28/11) Spend time to write term papers

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14. Research project presentation I (12/5/11) Each student will have 15 minutes for presentation and 5 minutes for Q & A following the Academy of Management presentation convention.

Research method session (self-selection bias) October 12, 2011 Shaver, M. 1998. Accounting for endogeneity when assessing strategy performance: Does entry mode choice affect FDI survival? Management Science, 44: 571-585. Lee S.-H. & Makhija, M. 2009. The effect of domestic uncertainty on the real options value of international investments. Journal of International Business Studies. 40: 405-420. Lee, S.-H., & Baik, Y. 2010. Corporate lobbying and injury claims in antidumping cases: Looking into the Continued Dumping and Subsidy Offset Act. Journal of Business Ethics, 96: 467-478 Other references (skim through) Hamilton, B., & Nickerson, J. 2003. Correcting for Endogeneity in Strategic Management Research, Strategic Organization. 1: 51-78. Hitt, M., Bierman, L., Uhlenbruck, K., & Shimizu, K. (2006). The importance of resources in the internationalization of professional service firms: The good, the bad, and the ugly, Academy of Management Journal, 49: 1137-1157.

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