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International Business

International Business

Second Edition

© 2008 | 616 pages | SAGE Publications, Inc
Written by two leading international business scholars, the Second Edition of International Business takes a truly global perspective that goes beyond the United States, presents the latest concepts, tools and events and adopts integrated and problem-solving approaches for all chapters.

The book highlights the role of culture, politics and legal issues in international business and illustrates how they influence institutions, structures and processes that permeate all functions of business. This is the only international business textbook that offers dedicated discussion of small and mid-size international firms (where many students are likely to be employed) in addition to large multinational enterprises. It is also the only text to offer chapters on corruption, e-commerce, and international entrepreneurship.

The book offers a highly integrated and action-focused approach to the field that helps the reader make explicit connections across concepts and functions, develops the skill to address various IB issues and problems, and most importantly, broadens understanding of the global business environment and its repercussions for executives. In addition to superior internal integration of the various issues discussed in the book (for example this may be the only IB text where the chapter on finance and accounting has specific references to culture and how it affects those functions), the book provides easy to understand links to functional business areas, thus enabling better integration within the BA or MBA business curriculum.

This book is suitable for both undergraduate and graduate business students taking such courses as international business, international Management, Global Business, Global Business Strategy, Multinational Management, Foreign Direct Investment.

CHAPTER 1 - International Business in an Age of Globalization
OPENING CASE The Coca-Cola Company  
An Age of Globalization  
What Does Globalization Mean for You?  
The Face of Globalization  
Who Benefits from Globalization?  
Globalization and the Monopoly Power of Large Corporations  
Globalization and the Environment  
Globalization: The Social Balance  
Globalization and International Business  
What is International Business?  
International Versus Domestic Business  
Why Do Firms Expand Internationally?  
The Structure of This Book  
PART ONE Concepts and Theories in International Business
CHAPTER 2 - International Trade Theory and Application
OPENING CASE The Banana War  
International Trade Theories  
The Mercantilist Doctrine  
Absolute Advantage Theory  
Comparative Advantage Theory  
Heckscher-Ohlin Theorem  
The Leontief Paradox  
Human Skills and Technology-Based Views  
The Product Life-Cycle Model  
Linder’s Income-Preference Similarity Theory  
The New Trade Theory  
INDUSTRY BOX The Global Automotive Industry  
Theory Assessment  
International Trade Patterns  
International Trade Volume and Growth  
Service Trade  
Trade Measurement  
Major Exporters and Importers  
U.S. Trade Partners  
Trade Balance  
Opposition to Free Trade  
The Sovereignty Argument  
The Lowest-Common-Denominator Argument  
Trade Reciprocity  
Types of Trade Barriers  
Tariff Barriers  
COUNTRY BOX The United States and Steel Imports  
Export Controls  
Dumping and Anti-Dumping  
Non-Tariff Barriers  
Administrative Barriers  
Production Subsidies  
Emergency Import Protection  
Foreign Sales Corporations  
Embargoes and Boycotts  
Technical Standards  
Barriers to Service Trade  
CHAPTER 3 - Foreign Direct Investment Theory and Application
OPENING CASE “The McDonald’s of Thai Food”  
Definition and Types of Foreign Direct Investment  
FDI Versus Foreign Portfolio Investment  
Types of FDI  
Entry Mode  
The Strategic Logic Behind FDI  
How MNEs Benefit from Foreign Direct Investment  
Enhancing Efficiency from Location Advantages  
Improving Performance from Structural Discrepancies  
Increasing Return from Ownership Advantages  
Ensuring Growth from Organizational Learning  
The Impact of FDI on the Host (Recipient) Country  
FDI Impact on Domestic Enterprises  
Current Theories on FDI  
Product Life-Cycle Theory  
Monopolistic Advantage Theory  
Internalization Theory  
The Eclectic Paradigm  
New Perspectives on FDI  
The Dynamic Capability Perspective  
The Evolutionary Perspective  
INDUSTRY BOX MNEs and FDI in the Automotive Industry  
The Integration-Responsiveness Perspective  
Patterns of FDI  
FDI Outflows  
FDI Inflows  
Inflows into Developing Countries  
The Transnationality of Host Economies  
FDI via Mergers and Acquisitions (M&As)  
Intra-Regional Patterns  
The Investment Environment  
FDI Decision Criteria  
The Lost Continent: FDI in Africa  
CHAPTER 4 - The Multinational Enterprise
OPENING CASE Johnson & Johnson  
What Is a Multinational Enterprise?  
The Degree of Internationalization  
History of the MNE  
The World’s Largest MNEs  
The Industry Composition of MNEs  
The Growth of Service MNEs  
The Image of the MNE  
The MNE in the Public Eye  
The Borderless Corporation: Myth or Reality?  
The Competitive Advantage of the MNE  
MNE’s Capabilities  
The MNE from Emerging/Developing Economies (DMNE)  
The Largest Developing Country MNEs  
Obstacles Facing MNEs from Developing Economies  
DMNE Advantage in Global Markets  
Typical Features of DMNEs  
COUNTRY BOX Asian MNEs in China  
The Small and Medium-Size International Enterprise (SMIE)  
What is an SMIE?  
Obstacles to SMIE Internationalization  
SMIE Advantages in Internationalization  
SMIE Internationalization Features  
INDUSTRY BOX Investment Banking and the SMIE  
Born International  
PART TWO Endowments and Environments of International Business
CHAPTER 5 - Country Competitiveness
OPENING CASE Singapore’s Competitive Advantage in the Hard Disk Drive Industry  
Defining Country Competitiveness  
Country Competitiveness and MNEs  
Country-Level Determinants  
Science, Education, and Innovation  
Macroeconomic Soundness  
Industry-Level Determinants  
INDUSTRY BOX E-Commerce as an Element of Country Competitiveness  
Firm-Level Determinants  
Individual-Level Determinants  
COUNTRY BOX Italy: Can Berlusconi Renew the Nation?  
Government Role  
CHAPTER 6 - The Cultural Environment
OPENING CASE The Goodyear-Sumitomo Alliance  
What Is Culture?  
Culture and International Business  
Culture Does Not Explain Everything  
Correlates of Culture  
National Culture Classifications  
Hofstede’s Dimensions of Culture  
COUNTRY BOX Korea—Power Distance in the Cockpit  
Schwartz’s Classification  
Trompenaars and Hampden-Turner’s Classification  
Other Dimensions of Culture  
National Culture Clustering  
Corporate Culture  
Classifications of Corporate Culture  
Other Layers of Culture  
Key Cultural Issues  
Cultural Etiquette  
Cultural Stereotypes  
Cultural Distance  
Convergence and Divergence  
INDUSTRY BOX Cultural Industries  
CHAPTER 7 - The Political and Legal Environment
OPENING CASE Burger King Israel  
The Political Environment  
The Institutional Context  
The MNE-Government Relationship  
The MNE Relationship with the Host Government  
The MNE and its Home Government  
Coalition Building and Influence Tactics  
INDUSTRY BOX EU Retaliation Against U.S. Steel Tariffs  
Political Risk  
The Measurement of Political Risk  
Regional-Level Politics  
Micro-Region Political Processes  
The Legal Environment  
The Institutional Context  
COUNTRY BOX Indonesia: Manufacturers Life in Indonesia  
Legal Jurisdiction  
Regional Jurisdiction  
National Jurisdiction  
Legal Issues of Interest to the MNE  
Rule of Origin Laws  
Competition Laws  
Marketing and Distribution Laws  
Product Liability Laws  
Patent Laws  
PART THREE Global Markets and Institutions
CHAPTER 8 - International Economic Integration and Institutions
OPENING CASE M’s Response to European Market Integration  
International Economic Integration  
Global-Level Cooperation Among Nations  
The World Trade Organization (WTO)  
COUNTRY BOX China: China Joins the WTO  
The International Monetary Fund (IMF)  
The World Bank Group  
Other International Economic Organizations  
Regional-Level Cooperation Among Nations  
Postwar Regional Integration  
North America: The North American Free Trade Agreement (NAFTA)  
Europe: The European Union (EU)  
Asia Pacific  
Latin America  
Africa and the Middle East  
Regionalization vs. Globalization  
Commodity-Level Cooperation Among Nations  
Organization of Petroleum Exporting Countries (OPEC)  
The Multifiber Arrangement (MFA)  
Strategic Responses of MNEs  
INDUSTRY BOX Siemens Sharpens its Focus to Respond to the Single Market  
CHAPTER 9 - The International Monetary System and Financial Markets
OPENING CASE The Mexican Crisis During and  
History of the International Monetary System  
The Gold Standard Period (–)  
The Inter-War Years and World War II (–)  
The Bretton Woods System (–)  
The Post-Bretton Woods System (–Present)  
Contemporary Exchange Rate Systems  
Fixed-Rate System  
Crawling Peg System  
COUNTRY BOX Hong Kong: Can the Hong Kong Dollar Retain the Fixed Peg to the U.S. Dollar?  
Target-Zone Arrangement  
Managed Float System  
Independent Float System  
Advantages and Disadvantages of the Floating System  
Determination of Foreign Exchange Rates  
Purchasing Power Parity (PPP)  
Interest Rate Parity (IRP)  
Implications for MNEs: Foreign Exchange Forecasting  
The Balance of Payments  
Current Account  
Capital Account  
Official Reserves Account  
International Foreign Exchange Market  
Landscape of the International Foreign Exchange Market  
Market Participants and Functions  
Foreign Exchange Rate Quotations  
Transaction Forms  
Foreign Exchange Arbitrage  
Black Market and Parallel Market  
International Capital Markets  
International Money Markets  
International Bond Markets  
INDUSTRY BOX Foreign Companies Borrow in Cheap U.S. Bond Market  
International Stock Markets  
International Loan Markets  
The Asian Financial Crisis  
The Financial Perspective  
The Political/Institutional Perspective  
The Managerial Perspective  
PART FOUR International Business Strategies
CHAPTER 10 - International Entry Strategies
OPENING CASE DuPont’s Entry Strategies into China  
International Location Selection (Where)  
Locational Determinants  
COUNTRY BOX Federal Express Selects Subic Bay  
Decision Framework  
Timing of Entry (When)  
Early-Mover Advantages  
Early-Mover Disadvantages  
Decision Framework  
Entry Mode Selection (How)  
Entry Mode Choices  
Trade-Related Entry Modes  
Transfer-Related Entry Modes  
FDI-Related Entry Modes  
Decision Framework  
Greenfield Investment, Acquisition, and Merger  
The Evolutionary Entry Path  
INDUSTRY BOX Unilever’s Acquisitions in Latin America  
CHAPTER 11 - Organizing and Structuring Global Operations
International Strategy and Organization Design  
Global Integration and Local Responsiveness  
MNE Strategy and Design  
Subsidiary Roles and Imperatives  
MNE Organizational Structures  
The National Subsidiary Structure  
The International Division Structure  
The Global Functional Structure  
The Global Geographic Structure  
COUNTRY BOX Regional Headquarters in Asia: The EU Versus Asia  
The Global Product Structure  
INDUSTRY BOX Global Product Design at the Ford Motor Company  
The Global Matrix Structure  
The Mixed Structure  
Integrating Global Operations  
Tools for Global Integration  
The Transition Challenge  
The Role of Corporate Headquarters  
CHAPTER 12 - Building and Managing Global Strategic Alliances (GSAs)
OPENING CASE Motorola and Siemens AG in Germany  
Defining Global Strategic Alliances  
Types of GSAs  
Rationales for Building GSAs  
Challenges Facing GSAs  
Building Global Strategic Alliances  
Selecting a Local Partner  
Negotiating Alliance Contracts  
Structuring Global Strategic Alliances  
COUNTRY BOX Spain: Fujitsu in Spain: Barriers to Alliance Management  
Managing Global Strategic Alliances  
Managing Inter-Partner Learning  
Exercising Managerial Control  
Heightening Cooperation  
Thinking Ahead of Exit  
INDUSTRY BOX Experience of Building GSAs in Corning and Emerson  
CHAPTER 13 - Managing Global Research and Development (R&D)
OPENING CASE Managing Global R&D at Nestlé  
Why Globalize R&D?  
Benefits and Challenges of Global R&D  
COUNTRY BOX India: R&D Centers of Global Companies in India  
Designing and Structuring Global R&D  
Type of Foreign R&D Units  
Selecting R&D Location  
INDUSTRY BOX Ford Locates its R&D Center in Aachen, Germany  
Structuring Global R&D Activities  
Managing and Operating Global R&D  
Human Resource Management  
Autonomy Setting  
Global Planning  
Communication Improvement  
Technology Transfer Across Borders  
PART FIVE Functional IB Areas
CHAPTER 14 - Financial Management for Global Operations
OPENING CASE Minimizing Exposure in RTZ  
Why Learn Financial Management?  
International Trade Finance  
International Trade Payment  
Export Financing  
Financing for Global Business  
Intercompany Financing  
Equity Financing  
Debt Financing  
Local Currency Financing  
Financing Decisions  
Managing Foreign Exchange Risk and Exposure  
Foreign Exchange Risk and Exposure  
Transaction and Economic Exposures  
Managing Transaction Exposure  
Managing Economic (Operating) Exposure  
INDUSTRY BOX Netting in Philips  
Global Coordination of Exposure Management  
COUNTRY BOX Latin America: Eight Hedging Techniques in Latin America  
Working Capital Management  
Cash Management  
Foreign Receivable Management  
CHAPTER 15 - International Accounting for Global Operations
OPENING CASE Compaq Won the Case  
Country Differences in Accounting  
Why Accounting Systems Differ Among Countries  
INDUSTRY BOX Accounting Diversity in Volvo  
National Accounting Zones  
International Accounting Harmonization  
International Accounting Standards  
COUNTRY BOX Australia: Accounting in Australia  
Foreign Currency Translation  
Commonly Used Translation Methods  
Harmonization of Translation Methods  
International Accounting Information Systems  
Transfer Pricing and Taxation Strategies  
Why Transfer Pricing?  
Transfer Pricing Techniques  
Transfer Pricing Regulations and Penalties  
Tax Havens, Treaties, and Strategies  
Tax Havens  
Tax Treaties  
Other Tax Strategies for MNEs  
CHAPTER 16 - Global Marketing and Supply Chain
OPENING CASE Domino’s Pizza  
The International Marketing Challenge  
Assessing Market Potential  
Globalization and Localization in International Markets  
Globalization Forces  
Localization Forces  
Product Adaptation  
COUNTRY BOX The Kimchi Doctors  
Country-of-Origin Effect  
Channel Decisions  
Marketing Alliances  
The Global Supply Chain  
The Globalization of Supply Chains  
Global Sourcing  
Customizing the Supply Chain  
Transportation Modes  
INDUSTRY BOX Global Logistics at Wal-Mart  
Crossing National Borders  
CHAPTER 17 - Global Human Resource Management
Strategic IHRM  
Staffing the MNE  
The Globalization of Boards of Directors  
INDUSTRY BOX The Globalization of the Board of Directors in Different Industries  
COUNTRY BOX The Globalization of Boards Across the Globe  
Staffing the MNE Ranks  
Country-Specific Issues  
The Expatriate Workforce  
Types and Distribution of Expatriates  
Using Expatriates: Pros and Cons  
Expatriate Failure  
Expatriate Selection  
Preparing for Foreign Assignment  
Culture and Compensation  
HRM in International Affiliates  
Human Resource Problems in Foreign Affiliates  
Preparing for an Assignment in a Foreign Affiliate  
PART SIX Emerging Issues in International Business
CHAPTER 18 - Global Internet and E-Commerce
OPENING CASE Otis Elevator  
Internet and E-Commerce Diffusion  
Comparative Internet Demographics  
E-Commerce around the Globe  
COUNTRY BOX Nepal: The Internet in Nepal  
Information Security  
E-Business Climate  
National E-Readiness  
Cross-Border E-Commerce  
The Impact of E-Commerce on International Business  
Global E-Commerce Challenges  
Standardization Forces  
Localization Challenges  
Taxation Issues  
INDUSTRY BOX Taxing Digitized Products  
CHAPTER 19 - Ethics and Corruption in the Global Marketplace
OPENING CASE Shell Group  
Ethics and Corruption in International Business  
Definition and Magnitude of Corruption  
The Origins of Corruption  
Drawbacks of Corruption  
Corruption Rankings  
Types of Corrupt Practices  
Money Laundering  
Piracy and Counterfeiting  
INDUSTRY BOX Piracy in the Global Software Industry  
Bribe Paying  
The Foreign Corrupt Practices Act (FCPA)  
The Globalization of the Fight Against Corruption  
COUNTRY BOX China: Counterfeiting and Piracy in China  
CHAPTER 20 International Entrepreneurship
OPENING CASE Japanese Entrepreneurs in Hawaii  
Defining International Entrepreneurship  
Comparative Entrepreneurship  
Culture and Entrepreneurship  
Funding New Ventures  
Cross-Border Entrepreneurship  
Internationalizing the Born Global Enterprise  
INDUSTRY AND COUNTRY BOXES Israeli Start-Ups in the Global Market Place  
Chapter Summary  
APPENDIX The OECD Guidelines for Multinational Enterprises
Organization Index
Name Index
Subject Index

"Offering an integrated, 'reader friendly', practical, and 'real-world' approach to the analysis and conduct of doing business in a global market.  International Business is an ideal classroom text book for college courses and a welcome, core addition to Business School and Academic Libarary Reference Collections."  —THE MIDWEST BOOK REVIEW

Able Greenspan
The Midwest Book Review

Very similar to our current text.

Mr Thomas Cottam
Newcastle Business School, Northumbria University
December 30, 2013

this book has provided good case studies and relevant real case example. Have a few in our library

Ms Yus aznita Ustadi
Faculty of Admin & Policy Studies, Mara University of Technology
December 14, 2011

Very detailed information - good for supplementary reading

Dr Anja Kirsch
Lehrstuhl für Personalpolitik (Dept of Human Resource Management and Labor Politics), Freie Universität Berlin
September 20, 2011

Very well structured book, which helps us to follow our intended introduction to international business from the macro to the micro level by covering all essential topics.

Ms Anna Strutzenberger
Department of International Management, Johannes Kepler University of Linz
October 12, 2010

Oded Shenkar

Oded Shenkar is Ford Motor Company Chair in Global Business Management and Professor of Management and Human Resources at the Fisher College of Business, the Ohio State University; and has taught in China, Japan, Israel and the UK. He holds B.A. and MSc.soc degrees in East Asian Studies and Sociology from the Hebrew University of Jerusalem, and M.Phil and PhD degrees from Columbia University. In addition to strategic alliances, his main areas of interest are cross-border investment and the impact of culture on international business. He has published numerous articles in the Academy of Management Review, the Academy of Management Journal,... More About Author

Yadong Luo

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ISBN: 9781412949064