![]() By contrast, in the longer term, make decisions are more beneficial than coopete decisions. More precisely, we underscore that coopete decisions provide more short-term benefits than make decisions. We show that both make and coopete strategies lead to short- and long-term benefits as well as risks. Based on a case study of Airbus Defence and Space, we study two telecommunication satellite innovation projects (one developed internally and the other with a competitor). We investigate the circumstances under which MNEs prefer to “make” or “coopete” for certain specific innovation projects, which has not previously been addressed in the literature. While multinational enterprises (MNEs) possess the resources and knowledge to develop innovation projects internally with their own international subsidiaries, they sometimes prefer to develop innovation projects with their competitors. We conclude with actionable recommendations for improving institutional distance research. Building on our review and previous critical work, we note key ambiguities in the institutional distance literature related to underlying theoretical perspectives and associated mechanisms, distance versus profile effects, and measurement. We substantiate our qualitative review with a meta-analysis, which synthesizes the main findings in this area of research. We use this as an organizing framework to describe the different ways in which institutional distance has been conceptualized and measured, and to analyze the most common organizational outcomes that have been linked to institutional distance, as well as the proposed explanatory mechanisms of those effects. We start with a discussion of the three institutional perspectives that have served as a theoretical foundation for this construct: organizational institutionalism, institutional economics, and comparative institutionalism. This paper presents a review and critique of the 20-year-old literature on institutional distance, which has greatly proliferated. I present empirical evidence on the pervasiveness of this critical challenge to cross-national distance research and propose a practical and rigorous solution for addressing it, which is to use “pure” distance indicators that are cleansed from confounding home- and host-location influences. As a result, in empirical distance research, genuine distance effects are often confounded with country-specific measurement error in the dependent variable as well as with direct effects due to various home- or host-country features. Location-identification can occur irrespective of the number of home/host countries considered and means that a distance indicator partly captures country fixed effects when used as an independent or explanatory variable. This problem is that cross-national distance metrics partially identify host and/or home countries in one’s sample, what I term location-identification. Firm strategies can mediate the effect of trade policies on GVC configurations in two ways: (1) firms can accommodate trade restrictions and trade agreements by altering supply and demand locations and by switching supply-chain partners and (2) firms pursue diverse strategies to upgrade their value chain activities, leveraging the shifting geographies associated with new trade rules.Īlthough recent work provides insightful theoretical and practical suggestions for improving contextual distance research in international management, the fundamental problem with using distance indicators as explanatory variables remains too little recognized and largely unaddressed. While trade policies often provide momentum for an adaptive reconfiguration of GVCs, firms’ strategic actions are crucial in modifying the geographic and organizational features of GVCs in ways that support their longevity. Our framework highlights the dynamic interaction between GVC-oriented trade policies and firm strategies, which often has counterintuitive implications in terms of upgrading outcomes for the countries and companies involved in these GVCs. We anchor our argument in the historical evolution of three classic GVCs – apparel, automobiles, and electronics – from the 1970s to the present. ![]() ![]() ![]() Contrary to the expectation that trade restrictions lead to the shrinking or disruption of GVCs, our article posits that the unintended consequences of trade policies (both restrictions and trade agreements) are amplified by the prevalence and organizational complexity of GVCs. The recent U.S.–China trade conflicts cast new light on the role of trade policies in global value chains (GVCs). ![]()
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