COLEUMNC · Cross-border strategic collaboration by European MNCs: a multi-level investigation of the effects of individuals, organizations and societies

Final Activity Report Summary - COLEUMNC (Cross-border strategic collaboration by European MNCs: A multi-level investigation of the effects of individuals, organizations and societies)

Cross-border strategic collaboration by European MNCs serves as a vehicle for advancing technological and economic development and further integration and stability within the EU. Inter-firm collaborations by MNCs play a crucial role as new institutions for reallocating material and intellectual capital. This research project investigated international strategic alliance and joint venture activities involving the World's 2000 largest multinational corporations (MNCs), of which approx. 550 are European, in order to determine implications for a) individual behaviour and career paths within organisations, b) organisational competitiveness within local and international industries, and c) national, regional and global policy. The project utilised a multi-level design to analyse the relationships between behavioural interdependencies at the individual level, strategic decision-making at the firm level, and extrinsic macro-economic forces in relation to cross-border strategic collaboration. Three early results stand out: 1) Preliminary results suggest that the level and nature of cross-border collaborative activities involving MNCs is much greater than previously assumed. A sub-sample of the 550 largest European MNCs indicate that both the scale and scope of cross-border collaborative activities by these firms (over the past 17 years) exceeds other types of FDI, including MAs, Greenfield investments, etc. The strategic and financial importance of cross-border alliances for individuals, firms and nations has yet to be assessed; however, early evidence suggests that cross-border collaboration may be among the most important strategies for firm internationalisation during the past two decades in many industries. The initial results suggest that internationalization of MNCs is positively related to firm performance; this applies both for international scale and scope strategies. Furthermore, the effects are stronger for highly product diversified firms and for companies originating from countries with large domestic markets and less efficient labor markets. These results point to the importance of including contextual variables in the study of firm internationalisation in general and strategic cross-border collaboration in particular. 2) Evidence supports the strong effects of individual level characteristics of the top management teams and alliance managers on firm internationalisation and performance. Research results support the importance of the composition of the top management team in strategic decision-making. Moreover, while firms may develop collaborative capabilities over time as a result of engagement in multiple alliances, these capabilities are created and nurtured by individuals. Project results suggest that it is the interaction between individual and organisational level factors that determine the degree of collaborative capability and essentially alliance performance. Together, these results point to the value-added of investigating international strategic alliances from a multi-level perspective. 3) Cross-border collaborations often fail to meet their objectives. Early results suggest that the often-cited cultural distance problems do not explain this phenomenon. A large-scale meta-analytical review of alliance and joint venture studies reveal that managers involved in strategic collaboration take cultural distance into account when forming cross-border alliances and adopt governance structures accordingly. Misalignment between partner objectives, inadequate attention to partner selection criteria, and poor inter-organisational structures for knowledge sharing combined with unrealistic expectations are far more likely to explain the relatively poor performance of many cross-border alliances. In addition, industry and macro-environmental uncertainties play a crucial role in influencing the outcome of these alliances over time. These preliminary findings point to the importance of understanding alliance relationship development as a dynamic process embedded within industry and national context(s).

Data: CORDIS, © European Union