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Professor Li’s team has conducted three research projects on different aspects of HR management. They look at encouraging innovative behaviour in the workforce, the role of HR practices in different local contexts, and the practice of paradoxical leader behaviour.

In one research project, Professor Li and her colleagues focus on the role of innovation, and explore an interesting question: “Are performance-based rewards sufficient to encourage innovation?”. In the current global market, companies need to be adaptable and versatile in order to thrive. “Employee innovative behaviours” are increasingly recognised as a major contributor to organisational innovation. This refers to activities undertaken by employees to generate, develop and implement new ideas. Businesses increasingly aim to encourage their employees to work in this way.

Research on how HR management can foster innovative behaviour is still in its early stages. Professor Li’s work is an important and timely contribution to this.

She draws on situational strength theory, which suggests that the extent to which your personality traits drive your behaviour depends on the situation you are in. She references research arguing that strong organisational structures that provide support and clarity can liberate their employees from unhelpful distractions and enhance creativity.

Using these ideas, she investigates the relationships between financial and non-financial performance-based rewards, employee perceptions of HR strength, and the uncertainty avoidance of the country within which an organisation operates.

HR strength refers to the level of clarity and consistency in terms of what employees are expected to deliver and why. Uncertainty avoidance is the extent to which a society, organisation, or group relies on social norms, rules, and procedures to alleviate the unpredictability of future events.

In her study, she used responses from 1589 employees and 186 managers in 29 organisations across 10 countries. The study adopted a multilevel design, which aimed for both breadth and depth, drawing on data at individual, organisation, and country levels. The organisations represented in the sample are from different industries and vary in size, and the perceptions of both employees and managers are included.

Dr Li’s research found that performance-based rewards alone were not significantly associated with innovative behaviours. However, they were much stronger where there was high HR strength and low uncertainty avoidance. Put simply, performance rewards were more effective at encouraging innovation when HR processes were clear and supportive, and when the host society of the organisation was more accepting of ambiguity, uncertainty and change. This emphasises the important role of HR practices and employees’ understanding of them.

In a second research project, Professor Li and her colleagues conducted two studies to investigate an intriguing question: “Will companies’ investment in employees enhance performance?” They explored the impact of the skills, knowledge and experience of the workforce in a region, and examined how this affects the relationship between a company’s HR practices and how well the company does in China.

In recent years, there has been much emphasis on researching the fit between HR practices and their operating contexts. This has become increasingly vital given that globalisation has facilitated the rapid spread of strategic HR management from west to east. However, our knowledge about the effectiveness of HR practices in different socioeconomic and cultural environments remains limited.

In one study, Professor Li and her colleagues looked at data from 9,125 companies across 30 provinces. In another, they looked at 203 companies across seven provinces.

They found that when the quality of the employees in a region was low, the way a company managed its employees had a bigger impact on the company’s performance. They also found that when a company focused on being innovative, the effect was even stronger. Once again, this highlights the importance of HR practices and their increasing relevance in a landscape that rewards innovation.

In the third research project, Professor Li and her colleagues theorized the role of leadership.

As organisational environments become increasingly complex and dynamic, leaders face contradictory demands. They are required to combine self-centredness with a focus on their employees and colleagues. They must develop a closeness with their colleagues while maintaining a professional distance, treat junior members of staff equally while allowing individualisation, enforce work requirements while allowing workplace flexibility, and maintain control whilst encouraging autonomy. Professor Li and her colleagues call this “paradoxical leader behaviour”.

Existing research on organisational paradoxes has promoted different approaches for understanding and managing them. For example, one researcher suggests that the role of a leader is to support opposing forces and harness the tension that this creates.

Professor Li and her colleagues note that research on organisational paradoxes largely comes from a Western perspective. However, they also acknowledge the basic alignment between these ideas and Eastern perspectives rooted in the yin-yang philosophy. The yin-yang philosophy views the world as a holistic, dynamic environment in which two opposing yet interdependent forces shape all phenomena. This theoretical base could help to broaden our understanding of paradoxes beyond the Western perspectives generally seen in research.

Professor Li and her colleagues used a field sample of 76 supervisors and 516 subordinates from 6 firms. They examined the conditions that exist before and after leaders display paradoxical behaviour and assess how successful this mode of leadership is.

Their findings showed that leaders who think holistically and can understand complexities tend to exhibit this paradoxical leader behaviour. The leaders who embrace this were found to be more effective in complex environments, leading to better performance among their team members. This challenges traditional leadership approaches and emphasises the importance of cognitive flexibility. It also shows that holistic thinking is important for all managers, regardless of cultural differences.

We live in a complex, constantly changing world. For businesses to survive and thrive in this environment, they need to understand how to get the best out of their workforce. Studies like those conducted by Professor Li and her colleagues explore different techniques that can encourage high-quality performance and emphasise the vital importance of HR management.

The ‘ex-dividend day’ is the date on which stocks start trading without the value of their next dividend payment, which generally reduces their price since equity is paid out. Investors tend to engage in abnormal trading on this date, leading to unusual trading patterns.

Previous research shows that abnormal trading and stock price behaviour around ex-dividend days can be explained by tax preference and tax heterogeneity among investors – whereby different investors will be party to various tax rates and structures.

However, in a recent paper, Moritz Wagner and Xiaopeng Wei sought to understand whether this can fully explain the phenomenon. They focus on whether ‘cum-ex’ trading may also play a role.

Cum-ex trading is a practice in which stocks are quickly traded around the ex-dividend day, with and without dividend rights. This obscures who the actual owner of the stocks is, and tax authorities are unable to follow these rapid changes in ownership.

These transactions usually take 2 to 3 business days to complete, at which point the stocks are delivered to the buyer. When stocks are sold close to the ex-dividend day, the transfer date can coincide or overlap with the ex-dividend day, meaning that the stocks are sold with their dividend value but delivered without them.

As explained by Wagner and Wei, the standard clearing process ensures that the buyer receives the stocks at the ex-dividend price. The company that pays the dividend usually withholds the tax and transfers it to the central or governmental treasury, while the certificate for tax reimbursement is or was issued by the shareholder’s bank.

In a common form of cum-ex trading, however, the stock is not actually owned by the seller. Rather, the seller is short-selling the stocks, meaning that they have borrowed shares from a broker to sell them to a buyer who takes part in the scheme.

Since neither the seller’s bank nor the owner’s bank recognises this as a short sale, aware or unaware of the nature of the transaction, they both issue a tax certificate, although only one of the two shareholders actually paid withholding tax. In a final step, the buyer sells the stocks back to the short seller, who transfers the shares back to the original owner. The proceeds from the additional tax refunds are then shared among the parties.

This obfuscation of ownership allows networks of banks, brokers, hedge funds and law firms to obtain multiple tax refunds on taxes that have been paid just once or not at all. Ultimately, it provides an opportunity for some investors to earn short-term profits at virtually no extra risk, to the detriment of all other investors and society as a whole.

This practice evolved largely from well-known but ignored flaws in the tax structures of European countries. Despite warnings from whistle-blowers as early as 1992, the practice continued, with some banks setting up entire divisions specifically to offer cum-ex trading to high net-worth investors.

Subsequent investigations have identified hundreds of companies allegedly involved with suspicious transactions and several trials have been started or were pending at the time of Wagner and Wei’s research.

Tax authorities and lawmakers have generally acted very slowly upon numerous warnings. Germany has introduced laws to tackle cum-ex trading and has strengthened its legislation over time. However, surprisingly, no EU-wide coordinated efforts have been introduced.

So, how significant is the effect of ex-cum trading?

Using current market data from a range of European countries identified as potentially affected by cum-ex trading, Wagner and Wei analyse the scale of this issue.

Their study includes data from a sample of 4,295 firms and 34,564 dividend events. They also develop a two-stage regression approach to disentangle the effect of cum-ex trading from alternative explanations for the increase in trading volume around the ex-dividend day.

Before examining the extent of cum-ex trading in all countries, they used the case of Germany as an experiment to test the effectiveness of the proposed approach. As Germany has introduced laws to curb cum-ex trading, it can act as a natural control to ensure the research methodology is appropriate.

Once they determined that it is, the researchers examined the identified countries with potential cum-ex trading activity to estimate the associated cost. Theirs is the first academic study to formally estimate the tax loss from cum-ex trading across different countries.

The results suggest that European countries were or still are significantly affected by cum-ex trading. This is especially true for Denmark and Germany, where the practice has been widely reported. However, there is also considerable cum-ex trading in countries that have received less attention, such as Finland, Norway, and Spain.

This has led to a substantial loss in tax revenue for treasuries due to illicit refunds. The researchers report a conservative estimate of around 13.2 billion euro of tax revenue losses between January 2002 and August 2018.

So, why is this important?

Perhaps most obviously, but also most importantly, loss of tax revenue means that less public funding is available. This can lead to a reduction in all areas of government spending, which has ramifications across the entire society. This is particularly significant, considering that most countries run long-term budget deficits.

It is, perhaps, shocking that this practice has been known about for many years. Despite widespread knowledge of illicit trading activities, lawmakers have been slow to act. This has allowed pilfering of public funds, costing treasuries and citizens significant amounts of money.

The research conducted by Wagner and Wei highlights the importance of this issue. Recent court rulings have confirmed that cum-ex trading schemes are illegal and should not have been allowed to continue. If cum-ex trading is to be stopped, the researchers argue that tax loopholes need to be closed, and strong frameworks to prevent wrongful tax refunds should be introduced, as some countries have already done successfully.

Foreign direct investment can be hugely beneficial for host countries, providing jobs, knowledge exchange and technological innovation that can foster economic growth. Since the 1970s, most countries have loosened their regulations towards foreign direct investment and actively seek to attract it. However, foreign investments may entail risks, especially for national security.

For example, when critical infrastructure, such as a major energy provider, is owned and controlled by foreign investors, it could be vulnerable to politically motivated disruption in the event of a conflict with the home government of the foreign investor. Where investment exists for online products, the investor has the potential to acquire sensitive personal data, which could be abused by a foreign government. These kinds of concerns are especially acute if the foreign investor is owned or substantially influenced by its home government.

To mitigate these risks, many countries have developed procedures to screen foreign investment. Investment screening involves governments reviewing inward transactions and denying entry to investments that are deemed too risky. The rejection of investment normally occurs where it is believed that there are dangers to national security.

Investment screening is not new – it wasn’t unusual in the 20th Century for countries to evaluate whether investment would provide beneficial economic growth. However, as part of the general shift towards liberalised and open markets in the 1980s and 1990s, many governments in Europe and elsewhere removed these processes. Economic benefit-oriented investment screening was not seen as compatible with the internal European market, which emphasised openness and multilateralism.

In recent years, however, the geopolitical landscape has changed, and investment screening is back with a vengeance. China continues to use market-distorting industrial policy and substantially limits foreign investors’ ability to acquire Chinese enterprises; the US has pursued increasingly protectionist economic policies; and supply chain disruptions – either due to political events such as Russia’s military aggression in Ukraine or due to exogenous shocks such as the Covid pandemic – have demonstrated the potential risks of having critical supply chains concentrated in a few foreign countries.

By the end of 2017, the EU had announced that it was taking a major strategic shift towards a more assertive, unilateral trade and investment policy.

A screening framework for foreign direct investment was introduced, in parallel with the creation or reinforcement of national investment screening mechanisms in EU member states. These screening mechanisms are novel in that they focus on security, rather than economic benefits. In 2020, the first pan-European investment screening framework began operating. This provides mechanisms for review and national cooperation, but does not replace national screening processes. Today, 26 member states have an investment screening regime in effect or being drafted, but there are substantial variations across countries in how they work.

In their recent study, Professor Bauerle Danzman and Professor Meunier analyse how the different features of investment screening mechanisms in EU countries can be explained and why there are still variations in how, and how much, countries screen foreign investment.

The researchers highlight that are many key similarities between the investment screening mechanisms introduced in different member states. Most fundamentally, most states have newly adopted or strengthened their screening processes, and increased the number of sectors they review. All review investments in critical infrastructure and defence, with a high number reviewing critical technology sectors and acquisitions of media companies.

There has also been a decrease across countries in the equity thresholds necessary to trigger reviews. Reviews of 10 to 20% acquisitions are now becoming standard, whereas 25 to 50% was previously more common.

However, the team also identify substantial differences. There is no screening mechanism template in the EU, and member states have not agreed on a harmonised approach to screening across several different areas. Firstly, reviews vary in scope. Some countries only grant government authority to screen in specific industrial sectors, whereas others allow review of transactions regardless of sector.

Professor Bauerle Danzman and Professor Meunier also highlight variations in screening thresholds. While transactions over 10% are reviewed in most EU member states, there are important exceptions, such as Portugal, which still only screens majority-owned transactions. At the other end of the spectrum, some countries review transactions in sensitive sectors at thresholds even lower than 10%.

Countries also vary substantially in who oversees reviews and instances in which transactions are blocked. Most EU member states designate the economic ministry as the authority on reviews, but some require cross-ministry participation. This has implications in how investment screening mechanisms weigh the risks of investment.

Furthermore, while Portugal and Slovenia require ‘actual and sufficiently serious threats’ to public order and security to prohibit a transaction, other countries allow for blocks based on the ‘likelihood’ of an effect or the ‘potential’ endangerment of national security. This significantly affects the standards of evidence required.

So, what explains this? Professors Bauerle Danzman and Meunier identify several factors that could affect these differences: public debt, Chinese investment, research and development expenditures, and geographic groupings.

Their results show that the rise of China as an outwards investor has directly prompted the tightening of investment screening worldwide. However, there is less evidence that patterns of Chinese foreign direct investment explain variations in the implementation of screening mechanisms. They found the strongest correlations between screening mechanisms and research and development expenditure. Specifically, countries with large research and development expenditures were both more likely to have screening mechanisms and more likely to have cross sectoral review authority.

They also show that countries bordering Russia are more likely to enact investment screening mechanisms. This is consistent with the long history of concern amongst bordering economies regarding Russian influence, especially in relation to energy and critical infrastructure. This also challenges the idea that investment screening mechanisms are entirely a reaction to the growth of China.

Professors Bauerle Danzman and Meunier conclude by making some key policy observations about the use of investment screening mechanisms in the EU. They argue that, while the recent spread of investment screening is often perceived as a global shift towards protectionism, screening mechanisms are not necessarily designed to be protectionist instruments. On the contrary, given the potential for ‘coercive’ capital to undermine democratic institutions, European integration and economic liberalism, some level of investment screening may be necessary to prevent full economic protectionism.

They also posit that the strengthening of investment screening mechanisms across member states represents a shift from market logic to security logic in investment policy discussions. Finally, they discuss how the shift towards seeing foreign investment as a security issue has the potential to alter how competences are distributed within the EU. By ‘commercialising’ the various policies linking investment and security, the EU may be able to centralise its power over foreign direct investment and security.

Ultimately, the changing geopolitical landscape has highlighted foreign direct investment as an emerging security threat. It will be key to observe how the EU handles this moving forward, and how this changes its role on the world stage.

Scholars tends to acknowledge that MNCs have a large contribution to make in economic integration. For example, research on the Association of Southeast Asian Nations has shown that member states lead regionalism through both policy and public enterprises that stimulate and promote the development of private companies.

However, there is little research, particularly on Africa, that looks at the convergence of foreign policy and MNC strategy in regional integration. The research that does exist still focuses largely on the politics of the relationships involved, rather than the impact of MNCs’ contributions. Furthermore, the scholarship that has been conducted on Africa tends to focus on MNCs that originate in higher income countries.

In their recent paper, Professor Nshimbi and Dr Mkhabela assess the intersections between South Africa’s foreign policy and the behaviour of the country’s MNCs. Using historical, company archival, and textual data, their article explains the rationale behind focussing on MNCs as agents of continental integration.

To demonstrate their findings, they use the case studies of two African MNCs operating in the continent:  Shoprite Holdings Limited and Standard Bank Limited. They consider how these companies pursued cross-border investments and the implications for policy goals of integration.

Professor Nshimbi and Dr Mkhabela used Knill’s convergence theory to inform their work. This theory discusses the extent to which state policies and the strategies of MNCs become similar over time. The focus for the researchers was comparing the goals of South African foreign policy and MNC corporate expansion strategy.

They also wanted to avoid the pitfalls of previous research, which has tended to use a colonial analytical framework, depicting South African companies as playing a sub-imperial role, accelerating South Africa’s economic growth while engendering uneven regional development. It has also ignored the multilateral and voluntary nature of integration, the role of South African MNCs outside the country, and the role of African states in laying out the foundation for mutually beneficial regional integration measures.

South Africa’s post-apartheid foreign policy has emphasised continental integration at several levels. Firstly, South Africa was instrumental in drafting a revised agreement within the Southern African Customs Union. The draft established joint institutions and a development-oriented distribution of customs and excise revenue between its members.

In 2011, South Africa supported the goal to transform the Union from a solely monetary and customs union to an integrated organisation to promote regional economic development. They would develop a program on cross-border industrial development and better facilitate cross-border trade.

Further, South Africa took membership of the Southern African Development Community in 1992. It supported the Community’s belief in the liberalisation of intra-regional trade and investment. South Africa’s policy on region-based cross border development of supply chains and intra-regional trade was particularly important in this context.

In 2015, the country also supported the establishment of a free-trade area linking the Southern African Development Community, the Common Market for Eastern and Southern Africa, and the East African Community under the Tripartite Free Trade Area. The Tripartite Free Trade Area was considered an important milestone toward the conclusion of negotiations for the establishment of the African Continental Free Trade Area, which was launched in 2021.

These examples demonstrate that South Africa’s foreign policy has been committed to the goal of regional and continental economic integration. Their adopted policies support the mutual reinforcement of intra-continental trade and investment, the development of logistics infrastructures, the reduction of customs delays for goods and the establishment of regional supply chains.

So, what role do MNCs have to play?

South Africa’s 30-year National Development Plan 2030 proposes bringing business closer to foreign policy making. This approach acknowledges that MNCs are key actors in the international political economy and that governments should engage them to reap the benefits of their activities. Indeed, South Africa’s MNCs have independently executed expansion strategies that practically implement integration. Professor Nshimbi and Dr Mkhabela use two cases studies, Shoprite Holdings Limited and Standard Bank Limited, to show how leading businesses in Africa can ‘stitch’ the continent together.

Although Standard Bank’s presence on the continent dates back to the colonial era, it adopted a post-colonial expansion strategy after it was weaned off from British control. Now, Standard Bank has operations in 19 African countries, and its expansion has depended on its ability to integrate disparate markets. It has facilitated trade and market integration within and beyond the continent and supported the aspirations of South African companies seeking growth across Africa. For example, in 2016, the bank hosted conferences with clients from sub-Saharan Africa to promote inter-regional investment opportunities.

Similarly, the way in which South African grocery chain Shoprite pursued a post-Apartheid expansion strategy also bolstered international trade. In 1995, the business expanded into Zambia and subsequently became a major trader, exporting South African products, and importing others to satisfy the market it was cultivating.

During the financial year ending 2002, Shoprite distributed over 6700 products from over 230 South African producers. This necessitated the establishment of logistical infrastructure, which was set up for goods to reach distant markets. This encouragement of South African manufacturers was key to the success of Shoprite’s operations beyond the country’s borders. The business also advocated for market integration and criticized trade barriers, supporting various intra-continental trade agreements.

These examples show that MNCs can be central in bringing about African economic and political integration, and that their goals broadly align with domestic foreign policy. However, the dearth of research on the subject suggests that policymakers and corporate strategists lack reference sources to help them craft strategies to advance their interests and the wider goal of African integration.

Nevertheless, the convergence of state policy and corporate expansion strategies are methodologically discoverable. Further research should articulate the role that intra-continental MNCs can play in turning the aspirations of the African Continental Free Trade Area into reality. To achieve their goals, African Union member states should ensure that they design foreign policies that align the interests of MNCs with national and continental goals of integration.

The Russian market has always been high-risk, high-reward.

After the fall of the Soviet Union, foreign companies quickly saw exciting opportunities in the Russian market, as local companies could not satisfy demand and the economy was opened up.

The country is large and in a fantastic strategic position between Europe and Asia. While it has a smaller population than the other BRICS countries, it has always been amongst the wealthiest.

In particular, Russia has been a positive landscape for retailers. The total revenue for grocery retail within Russia in 2020 was 252.4 billion dollars. This was still growing and the country was projected to be the 8^th largest grocery retail market in the world by 2022. Digital innovation was also providing new growth opportunities through self-checkouts, cashless payments, electronic labelling systems, and mobile e-commerce.

However, the Russian market was also hard to navigate. Political risk was consistently high due to corruption and concerns around the rule of law, transparency and access to credit.

Auchan is one of the international retail companies that has experienced both the ups and downs of the Russian market.

Established in France in 1961, Auchan began as a local business in northern France. It quickly grew regionally and nationally, opening their first hypermarket in 1967 and pioneering European malls in 1969. By the 1970s, it had stores across the entire French territory and had become a key player in the retail industry. Over time, it remained stable, comfortably maintaining its position in the top five French grocery retailers, with an average 10% market share.

Auchan also expanded internationally. While France remained its biggest market, it has operated in thirteen countries in three continents. It first opened stores in Spain, under the brand Alcampo, later investing in neighbouring Western European markets. By the millennium, it had expanded to Asia, Eastern and Central Europe, and Africa. This put the company at the top of the global grocery retail industry, despite losing some momentum in recent years.

Auchan moved into Russia relatively early, in 2002. As one of the first foreign players in Russia, it had a first mover advantage.

The company invested a significant amount of time and money into the market, working hard to understand its customer base. It invested in and relied upon local suppliers to guarantee low prices and to secure procurement even through waves of sanctions.

It was successful at first, beating out much of its competition. However, it became weaker in subsequent years, in the face of new customer demands, competitive dynamics and geopolitical tensions.

For example, the Ukrainian revolution in 2014, which led to the annexation of Crimea, triggered international sanctions against Russia. These sanctions, along with a drop in the price of oil, led to soaring inflation and a plunge in the Russian GDP.

The subsequent financial issues affected many companies operating in Russia, including Auchan. Retailers saw stock prices, sales and profits drop, and some stores had to close. Nevertheless, there was no mass exodus and most international companies maintained their foothold in Russia.

Despite the decline of its position in the industry, Auchan’s goals in the country remained ambitious. Investment budgets increased and new stores and plants were opened in 2016 and 2017.

By 2018, there was market saturation of supermarkets in Russia. Fragmentation still existed and the grocery retail market was dominated by local companies and brands. After COVID, habits changed, and hypermarkets continued to decline.

Auchan, along with many other companies, was forced to invest more in e-commerce. Another planned priority for the company would be to develop their ultra-convenience stores, a small-to-medium urban format that differed from their traditional suburban supercentre style.

Despite new financial sanctions between 2019 and 2021, Auchan continued their investment of hundreds of millions of euros. By 2021, this had paid off. They had around 30,000 employees, operated 230 stores, and an estimated 30% of Russians did their in-person grocery shopping at their stores.

Auchan presented their 2021 financial results just after the invasion of Ukraine by Russia. Although their figures were disappointing in France, in Russia a long-awaited turnaround had occurred. However, the mood wasn’t celebratory.

Making the announcement, the CEO stated his support for Ukrainian and Auchan’s Ukrainian staff members. A few days later, Russian individuals and companies were slammed by unprecedented international economic sanctions. Moscow’s major financial institutions were effectively denied access to Western markets and international trade was severely disrupted.

Foreign companies, including Auchan, were put under considerable pressure to consider their positions in the country. Now they had to decide – should they remain in, or exit, the Russian market?

More than 300 companies suspended or scaled down their Russian operations within two weeks. For Auchan, this was a difficult decision to face. After 21 years in the country, should they stay the course under international pressure or leave a market that had only recently recovered?

Staying would risk market uncertainty and massive reputational damage. They had already received threats of boycott, protests, and accusations that they were supporting an authoritarian regime.

Exiting would mean losing the huge investments they had put into the Russian market and reducing their value to stockholders, many of whom were their Russian and Ukrainian employees. It would also mean that many of their ordinary Russian employees would lose their jobs.

Future prospects in the Russian market had to be taken into account, as well as the impact their decision would have on their markets in Ukraine and other Eastern European countries.

The Russian landscape after February 2022 was difficult, and complex to navigate. Auchan had a tough financial, business, and ethical decision ahead of them – which would they choose?