DEVELOPING THE ECLECTIC PARADIGM TO A MODEL OF GLOBAL STRATEGY: EXPLANATION OF THE IMPACT OF SEP 11

1
DEVELOPING THE ECLECTIC PARADIGM TO A MODEL OF
GLOBAL STRATEGY EXPLANATION OF THE IMPACT OF SEP
11 TERRORIST ATTACKS ON MNES PERFORMANCE

• Sali Li
• Manuel P. Ferreira
• Stephen Tallman
• University of Utah

Temple University the 6th Annual International
Business Research Forum April 2, 2005
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International Terrorist Incidents By Region
Source RAND Terrorism Chronology
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The Impact of Sep 11th Attacks on the
International Business Environment

• War on Terror
• the increase of anti-Americanism
• from the Atlantic Alliance the Atlantic Divide
  (Cohen-Tanugi, 2003)
• potential energy crisis
• Homeland Security Control
• the reduce of the transportation efficiency
  (e.g., 24-Hour Advance Cargo Manifest Rule)
• Business confidence
• the shrinkage of affordable insurance coverage
• the increase of awareness of terrorist attacks

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Develop the Eclectic Paradigm

• The past reappraisal
• To include the dynamic aspects (e.g.,Dunning,1988)
  
• In the age of alliance capitalism (e.g., Dunning,
  1995)
• The future direction
• Interaction between OLI (Dunning, 2001)
• Role for strategy (Dunning, 2001 Tallman 2004)

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A basic model of global strategy
L
Oa
Ot
I
MNE
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The impact of global environmental changes on
MNEs' resources capabilities

• Proposition 1 International diversification
  level is curvilinearly related (inverted U) with
  performance
• Capabilities to utilize international resources
  effectively, and to minimize internal
  collaboration costs (Tallman Li, 1996 Hitt,
  Hoskisson, Kim, 1997).
• High Iconic target
• Low lack understanding of cultural differences

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Preliminary Finding
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The impact of global environmental changes on
MNEs strategy

• Proposition 2 An exploration strategy will
  increase performance.
• Exploitation culturally offensive, taking static
  position
• Exploration higher local responsiveness

9
Preliminary Finding
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The impact of global environmental changes on
MNEs structure

• Proposition 3 The joint venture structure will
  increase performance.
• Hidden identity
• Joint ventures as real options (Kogut, 1991)
• Options value increase with the increase of
  uncertainty

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Conclusion

• Theoretical contribution
• Reappraise the eclectic paradigm as a global
  strategic management model in the new
  international business era.
• Managerial implication
• Facts More than 40 MNEs mitigate risks mainly
  by increasing coordination with stakeholders (FDI
  confidence Index, 2003)
• Our paper suggests how MNEs can strategically
  deploy resources, strategy and structure to
  better coordinate with international stakeholders
  thus reducing operational risks and enhancing
  performance in the post-Sep11th era.