Björn Ambos

Global value chains (GVCs) have revolutionized production processes and many companies no longer produce goods and services entirely in one single country or within their own organizational boundaries. Through off- shoring and outsourcing, value chains are sliced up and activities are dispersed to locations and actors where they can be produced or executed most efficiently. The fine slicing of GVCs also implies that innovation activities can be geographically dispersed and separated from other GVC activities. However, there have been inconsistent arguments on the impact of this dispersion on innovations and on the effect of innovations on GVC activities, as research on the topic has been sporadic, inconclusive, and fragmented. Thus, this paper conceptually discusses the nature of innovation in GVCs by reviewing literature and raises important questions that should be addressed. It also outlines a variety of possible research directions and future research foci that can and should be taken to develop the field.

In this paper, we propose and test an agency model for HQ-subsidiary relations. Drawing on classical agency assumptions, we develop a baseline hypothesis that links informal controls (i.e., socialization), HQ-subsidiary goal conflicts, and the HQ’s use of formal controls (i.e., behavioral controls). We subsequently introduce an important boundary condition, which reflects subsidiaries’ internal agency relations with subsidiary CEOs as second principals. More specifically, we argue that the baseline relationship only holds under low levels of second principal power. To test our model, we employed a unique study design with three parallel surveys addressing the agents and the two principals involved in 131 agency relations within one MNC.

This study investigates individual managers’ formation of psychic distance perceptions to foreign countries. Adopting a social psychological perspective, we propose three social-cognitive mechanisms - social comparison, mere exposure, and social learning - to help explain why and how country- and individual-level characteristics affect the formation of such perceptions. Based on an international survey of 1,591 managers located in 25 countries, we find that country-specific international experience, formal education, and a match between a managers’ first language and the language of the target country reduce psychic distance perceptions. Surprisingly, and in contrast to conventional wisdom, managers’ international and overall work experiences do not seem to have any effect on their distance perceptions. However, relative to country-level factors, individual-level antecedents seem to have rather limited explanatory power as predictors of overall psychic distance perceptions, lending support to the widely-employed practice of operationalizing psychic distances through country level indicators. In addition to these empirical findings, the study contributes by providing a theoretical social psychological framework for the understanding of how psychic distance perceptions are formed.

Distance is a central concept in international business research, yet there is debate about the construct as well as its operationalization. In this editorial, we address three of the most important recurring questions posed by authors, editors, and reviewers by examining the theory, methods, and data of distance research. We discuss (1) how to theorize on distance, and (2) what method and (3) what data to use when constructing a distance index. We develop practical recommendations grounded in theory, illustrating and supporting them by calculating cross-country distance indices for all available country pairs and two of the most used distance indices: cultural and institutional. We show that, whereas a specific method to calculate distance may matter to some extent, the choice for a specific cultural or institutional framework to measure cultural or institutional distance has a major impact on country–pair distances. Overall, this editorial highlights the importance of matching data and method to the theoretical argument.

Integrating distance research with the behavioral strategy literature on MNC headquarters-subsidiary relations, this paper explores how the distance between headquarters and subsidiaries relates to value added by the headquarters. We show for 124 manufacturing subsidiaries in Europe that, on average, distance is unrelated to value added by headquarters but that this effect is contingent upon the extent to which the subsidiary is locally embedded. Only after a certain threshold level of subsidiary embeddedness, distance is negatively related to headquarters value added. This effect is more pronounced for cultural, economic, and administrative distances than for pure geographic distance, highlighting the critical role of contextual variation for MNCs.

Firms seeking to develop or enhance their presence in the Asia Pacific region will, at some point, have to address the question of whether or not to set up a regional headquarters (RHQ). The relevance of the regional headquarters issue for companies operating in the Asia Pacific region is heightened by the rapid economic emergence of those countries and the debate over a new regional grouping for the area. This article seeks to contribute to the debate by describing the various roles RHQs can play and assessing their usefulness in achieving corporate ambitions. It is based on empirical data obtained through informal interviews with Western companies, and through a survey conducted by the INSEAD Euro-Asia Centre in the region in 1992.

Already on its introduction into the international business literature, the concept of ‘psychic distance’ implied asymmetry in the distance perceptions between country pairs, a characteristic corroborated in subsequent empirical studies. However, predominant empirical operationalizations and their theoretical underpinnings assume psychic distances to be symmetric. Building on insights from psychology and sociology, this paper demonstrates how national factors and cognitive processes interact in the formation of asymmetric distance perceptions. The results suggest that exposure to other countries through emigrants and imports of cultural goods and services have asymmetric effects on psychic distance perceptions. The size of these effects appears to vary with the size of the home country – smaller countries tend, on average, to perceive psychic distances to the rest of the world as smaller than do bigger ones. The reputational status of target countries relative to that of the home country is found to have a non-linear, asymmetric effect on distance perceptions.

Diese Studie untersucht die psychische Distanz von Schweizer Managern und ihren Handelspartnern. Unsere Daten zeigen, dass die Schweiz und ihre Handelspartner im Ausland sich gegenseitig unterschiedlich weit entfernt wahrnehmen. Diese wahrgenommene psychische Distanz hat einen Einfluss auf ihren Handel. Der Artikel schliesst mit einer Diskussion, wie Schweizer multinationale Unternehmen ihre relative Distanzwahrnehmung nutzen können, indem sie sich als europäischer Hub aufstellen.

In modern corporations, the corporate headquarters (CHQ) unit is considered central to the fortune of the overall firm. In light of ever-changing environments, changes at the CHQ have become a crucial concern in management research and practice, and scholars have studied a variety of changes at the CHQ. Despite the common focus on the CHQ entity and the potential for cross-fertilization across several research tracks, a coherent picture of this dispersed body of knowledge is lacking. In this article, we review 25 years of research on changes at the CHQ. In so doing, we advance a common language and an overarching framework that integrates the existing knowledge in the intellectual domains of strategy, organizational design and international business research. On this basis, we suggest directions for future research to advance our knowledge of: (1) the pressure for and resistance to changes at the CHQ, (2) interrelationships among changes at the CHQ, (3) change processes at the CHQ, (4) agents involved in changes at the CHQ and (5) adaptive and disruptive effects of changes at the CHQ. Overall, the study provides a conceptual basis for combining the existing knowledge of changes at the CHQ and serves as a guide for future research.