Conventional wisdom says that repetition leads to efficiency. The firm that produces 1,000 widgets should be more efficient at making widgets than the firm that only makes 100. We’ve seen this paradigm applied to many aspects of business over the last 30 years, including the internationalization of multinational corporations. Some maintain that the more countries a firm enters, the more efficient it is and the better its chances of success.
However, in a recent study I found that the conventional wisdom doesn’t hold up when it comes to understanding the impact of country selection on internationalization patterns and firm performance. I looked at whether it’s beneficial for firms to have prior experience before deciding to enter a new country and, if so, which experiences will help versus hinder success. My main question was: When does prior experience pay and are there penalties for having the wrong type of experience? Read More »
Jonathan Lehrich, Director, MIT Sloan Executive MBA Program
Working full-time while earning their MBA, students in MIT Sloan’s Executive MBA Program are constantly applying what they learn in class to their jobs. There is a compounding effect in that the more times they apply what they learn, the more they accumulate knowledge and expertise in their toolkits.
However, it’s a big world out there and a lot more can be learned when they have an opportunity to apply that knowledge outside of their own companies. After all, there are only so many experiments you can do in your own company before you bump into barriers. Read More »
Today U.S. multinationals have more cash stashed overseas than ever before –according to several estimates, companies have more than $1 trillion in profits squirreled away in foreign subsidiaries. Many of the companies with the most money abroad – including powerhouses from Apple to Google to Pfizer – say they’d like to bring a large portion of it back to the U.S.
This comes with a catch, however. The companies want a temporary tax holiday – nearly identical to the one passed in 2004, and the subject of my recent paper – that would allow them to repatriate profits attributed to their foreign operations at a 5.25 percent tax rate instead of the usual 35 percent. Most of the funds returned to the U.S. will likely be paid to shareholders rather than used for investment and new hiring (as the companies lobbying for the holiday claim). But the tax break would raise billions of dollars for the government and bring cash back to the U.S., which is arguably a good thing. (It’s no secret that the Obama administration has recently made overtures to reboot its relationship with the business Read More »