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A close reading of Adam Smith's works, "An Inquiry into the Nature and Causes of Wealth of Nations" and "The Theory of Moral Sentiments," indicates that he would not support the advocacy of free markets wholeheartedly. His view on market systems, although "free," implies strong institutions and regulations. Adam Smith would have been particularly concerned with the fact that the large multinationals are as much political actors as they are economic actors. He would have argued that there may be 'moral' limits to globalization. In his view, the general rules of morality are (in modern parlance) 'socially embedded.' Thus, sympathy and fellow‐feeling mostly operate at 'close quarters' and, in particular, they may not be effective at a transnational level.

A close reading of Adam Smith's works, "An Inquiry into the Nature and Causes of Wealth of Nations" and "The Theory of Moral Sentiments," indicates that he would not support the advocacy of free markets wholeheartedly. His view on market systems, although "free," implies strong institutions and regulations. Adam Smith would have been particularly concerned with the fact that the large multinationals are as much political actors as they are economic actors. He would have argued that there may be 'moral' limits to globalization. In his view, the general rules of morality are (in modern parlance) 'socially embedded.' Thus, sympathy and fellow-feeling mostly operate at 'close quarters' and, in particular, they may not be effective at a transnational level.

Purpose - The purpose of this paper is to introduce the notion of "rising power firms" and how these firms offer developmental promises and challenges to the face of international business (IB). We suggest that rising power firms offer novel capabilities, connect IB to global value chains (GVCs) and then introduce the papers in the special issue. Design/methodology/approach - The papers in the special issue are grouped under two distinct themes, one considering the capabilities of rising power firms and how these are shaped broadly by the economic and socio political features of their home countries. The second theme clusters papers that have a GVC dimension in so far as they highlight failures in upgrading, flag the disconnect between economic and social upgrading and provide a novel conceptualisation of social value creation. Findings - The international business literature has paid growing attention to the emergence of multinational enterprises (MNEs) from rising powers, notably the 'BRICS'. One perspective, a dominant perspective in IB, sees RP MNEs as a manifestation of catch–up efforts by firms from emerging economies, another perspective suggests that rising power firms compete with distinct capabilities and business models. This special issue highlights the latter perspective. Originality/value - This paper introduces five diverse papers that deal with issues pertaining to rising power firms and developmental perspectives. Keywords - Rising powers, emerging multinational enterprises (EMNEs), global value chains, development, upgrading, social value creation. Paper type - General review

Applying a resource-dependency perspective to intra-multinational enterprise (MNE) power [55,56], this paper examines the effect of the deployment of advanced ICT and particularly the implementation of enterprise resource planning (ERP) systems. Although subsidiaries in the multinational do not have authority-based or 'structural' power with respect to key strategic decisions [6,16], they may have 'resource-based' power in the form of knowledge and capabilities that is of value to the multinational as a whole. Business network analysis highlights the 'invisibility' of the external networks (often in the host country) to the upper echelons in the multinational through which valuable subsidiary knowledge and capabilities develop. It points out that this 'invisibility' undermines the headquarters' ability to control the subsidiary [3,28,36,44,70,74]. In this paper we argue that the deployment of ERP undermines the resource base of subsidiary power and thus helps to restore greater central authority in the MNE. The paper reports findings from studies in twelve MNEs which have implemented ERP and points out that from the perspective of subsidiary managers a key effect of ERP deployment is the reduction in their autonomy. This may have significant adverse implications for the futures of the MNE as a federative organizational form and the legitimacy of MNE operations abroad. © 2010.

This paper explores the paradoxical relationship between MNE current strategies and economic development. There is evidence that positive developmental impacts of FDI flows are conditional on high levels of human capital and thus on the existence of 'good' infrastructure in recipient countries. In this paper we suggest that current MNE strategies have a negative impact on the development of infrastructure in LDCs. The justification for this argument arises from the low developmental impact of current FDI patterns and from rising costs of attracting increasingly footloose investment. The overall effect is to aggravate government financial constraints on the development of basic infrastructure. We develop propositions for future empirical research. We also consider implications for MNE strategy and argue that current MNE strategies are not only ineffective for delivering poverty reduction but that current strategies in developing countries do not necessarily serve the interest of MNEs either. © 2008 Elsevier Inc. All rights reserved.

The aim of this contribution is to assess the impact of innovation policy on foreign subsidiaries innovation performance. The South Korean government has implemented a series of policies to enhance the innovation capabilities of private firms, whether foreign or locally owned. With more FDI in the country, the position of foreign subsidiaries as main actors for innovation is important. Yet the specific role of South Korean innovation policies in facilitating and promoting innovation by foreign subsidiaries remains under-studied. Further, the literature suggests that a subsidiary's innovation activities depend upon its strategic mandate. This article's fundamental contribution, therefore, is to analyse the influence of innovation policies and strategic mandates on the innovation performance of foreign subsidiaries. Using data from the Korean Innovation Survey, a series of models are constructed explaining the innovation performance of 423 foreign firms in the Korean manufacturing sector. Results suggest that subsidiary innovation is primarily explained by its strategic role, and competence-creating subsidiaries demonstrate higher levels of innovation performance. Innovation policy is found to influence more positively less innovative firms. Two types of policy are found to have a significant effect, namely technical support and tax incentives. © 2012 Macmillan Publishers Ltd.