We examine the extent to which host country income inequality influences multinational enterprises’ (MNE) expansion strategy for foreign production investment, depending on their specific strategic objectives. Applying a transaction cost framework, we predict that national income inequality has an inverted U-shaped relationship with foreign production investment. As inequality increases, MNEs accrue lower transaction costs arising from interactions with various local actors, leading to higher probability of investment. As income inequality increases further, its effect on location attractiveness will become negative, as (...) its attraction effect is increasingly offset by additional monitoring, bargaining, and security costs owing to the more fractious nature of high inequality societies. In addition, we suggest that the impact of income inequality is contingent on investment objectives: The inverted U-shaped relationship is stronger for efficiency-seeking investment but weaker for market-seeking and competence-enhancing investments. We find substantial support for our hypotheses through an analysis of 27 years (1986-2012) of data on Japanese MNEs’ overseas production entries. (shrink)

Entrepreneurship is important in economic growth and development. This study explores the likelihood that societal-level well-being and country-level self-expression values positively influence individual entrepreneurship across countries. Self-expression values mediate and reinforce the effect of societal well-being on entrepreneurship. Well-being is not simply an individual-level expression of positive emotions or an individual’s accumulated human capital alone. It is also a country’s stock of psychological as well as social resource and a macrolevel culture-specific emotion supporting entrepreneurship. This study provides a multidimensional approach (...) to exploring the effects of societal well-being and country-level self-expression values on entrepreneurship. The proposed conceptual model uses three theoretical propositions to delineate an indirect effect of societal well-being mediated through country-level self-expression values. The study also compiles measures of societal well-being terms from secondary data sets for use in cross-country comparative empirical research into entrepreneurship. (shrink)

Firms are central to wealth creation and distribution, but their role in economic inequality in a society remains poorly studied. In this essay, we define and distinguish value distribution from value creation and value appropriation. We identify four value distribution mechanisms that firms engage in and argue that shareholder wealth maximization approach skews the value distribution toward shareholders and top executives, which in turn contributes to rising economic inequalities around the world. We call on organizational scholars to study the value (...) distribution role of firms and its consequences for society, and introduce the articles in this volume of the special issue on economic inequality, business, and society. (shrink)