Impact of Firm Performance, Multi-Nationality, and Innovation in MNCs

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Table of Contents

CHAPTER 01: RESEARCH PROBLEM3

Introduction3

Section 1: Background and Justification4

Section 2: Research Approach13

CHAPTER 2: LITERATURE REVIEW15

Introduction to the research study15

Organization of the Study16

Key takeaways from the previous literature34

CHAPTER 3: METHODOLOGY41

Research design41

Research Questions42

Hypotheses development43

Population and sample selecting procedures44

Sample Selection procedure45

Variables and Measures46

Hypotheses and Corresponding Statistical Tests48

Data Analysis49

REFERENCES51

CHAPTER 01: RESEARCH PROBLEM

Introduction

The global financial crisis and the economic recession that started in early 2008, brought forth important questions in terms of corporate governance, executive pay packages, globalization trends, sustainability, and competitive strategy in the interconnected world economy. The crisis intensified the transformation of ongoing trends in the underlying drivers of global business conditions within the global business environment (Laudicina, 2010).

Researchers at MIT found that if executives could pay attention to global trends, it could significantly impact the performance of global companies and ultimately contribute towards international progress and development. However, relatively few companies often tried to optimize global attention (Allen & Cyril, 2011).

In 2010, China took over as the second-largest economy in the world, moving ahead of Japan, thereby representing the changing global economic landscape. Innovation was also determined as a key factor in the long-term success and sustainability of an organization given the fast changing globalization trends (Nye, 2010).

Another Most-Favored Nation (MFN), India, has also surfaced and become amongst the most favorite countries for people, global investors, corporate moguls and many other people can come across the globe to make way for the purpose and objective of progressing international businesses and contributing towards both internal and external performance of countries.

It was therefore, imperative to realize that as long-term strategy and execution was led by top executives in an organization, understanding the key factors impacting the pay packages of top executives would be equally critical. The initial years of the 21st century saw several corporate scandals and breaches in corporate social responsibility from companies such as Enron, WorldCom, AIG, Goldman Sachs, and others.

These scandals of misconduct and unreasonable executive compensation along with the financial crisis and global recession, led to general public mistrust and anger being directed at the leaders of these companies. These examples of breakdowns in public confidence in the executives and the breach of understanding between the shareholders and the Board of Directors led to the expectation that the latter were expected to oversee management so that the potential for conflict of interest between owners and managers could be policed (Conference Board, 2003).

Public scrutiny of executive compensation resulted in increased involvement of regulatory and governmental agencies, especially when success and pay packages of foreign, particularly American companies, came into consideration (Nishizawa, 2007). These changes in public and governmental perceptions and scrutiny resulted in stakeholder desires to understand the relationships between organizational strategy and firm performance and the levels of executive compensation.

This study therefore, attempts to determine

Whether there is a correlation between organizational performance and the level of executive compensation;

Whether there is a correlation between the level of globalization and the level of executive compensation; and

Whether ...