Helping Nestlé Evaluate Foreign Investments and Communicate with Stakeholders

Create knowledge. Make an impact.

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Summary

Research by the Centre for International Business University of Leeds (CIBUL) between 2001 and 2008 has been utilised by Nestlé, the world’s largest nutrition company, to improve its communication strategy and evaluate how its foreign investments create value and influence economic development, innovation, environment, society and different stakeholder groups (e.g. employees, suppliers and governments). CIBUL’s research has also (1) improved the services offered by intermediaries such as the investment-promotion arm of the British government (the UKTI) and the UN body for economic development (UNCTAD), and (2) benefited the businesses that these bodies serve by identifying factors that help them internationalise and derive greater value from international expansion.

Our research

Between 2001 and 2008 Peter Buckley, Mario Kafouros and Jeremy Clegg, on behalf of CIBUL, focused on three inter-related research strands: i) the locational advantages of nations and their impact on firms’ internationalisation, ii) the mechanisms by which innovation and internationalisation by firms enhance their performance and competitiveness in the global economy and iii) the way in which multinational enterprises integrate their global strategies to create value. The research involved multiple levels of analysis at international, country, region and firm levels.

In the first research strand they found that the performance benefits gained by firms through investing in a particular location are contingent upon their distinctive capabilities and resources. This differs significantly between firms from emerging countries (e.g. China and India) and developed nations (e.g. the UK and Germany). Therefore the location strategies of one firm cannot be transplanted to another. The second strand of work identified the way in which various factors help firms innovate and create value by sourcing scientific talent, knowledge and technologies that reside in different industries and countries around the world. A firm’s ability to combine these resources is determined by their network structure of affiliate firms and the breadth and depth of this network. The third strand of research integrated the previous two and created the “global factory” framework. The results can be used to identify difficulties firms face and strategies to overcome various challenges. 

Impact

Nestlé employs 280,000 individuals and has operations in over 200 countries. The company has used CIBUL’s research as a framework to assess the impacts of its international operations, develop its value creation strategy and improve its corporate communication plans. Nestlé is now able to measure how its actions and investments create value and benefit societies in the countries where it operates. The framework has been incorporated into the company annual reports and on their global website. The research is useful to companies such as Nestlé because it identifies the channels and mechanisms through which the foreign investment of multinational enterprises can be more successful. The research was also used as a basis for discussion, analysis and decision making in the Seoul G20 Business Summit where they served as an important input towards the work of the G20 Foreign Direct Investment Working Group. It has also helped shape the policy agenda of the United Nations Conference on Trade and Development (UNCTAD), particularly the World Investment Report which is extensively used by the UN, policy units, statistical offices and government institutions (115,000 downloads from 160 countries). Peter Buckley was principal consultant for the World Investment Report and devised its conceptual structure. CIBUL’s research has led to service innovations in the advisory sector via intermediaries such as UK Trade & Investment (UKTI) and China–Britain Business Council (CBBC). More specifically, UKTI funded CIBUL to conduct two research projects, and the findings were used to write the Opportunities for UK Businesses in Chinese Regional Cities report. This report has benefited British businesses by identifying which locations and markets offer superior business opportunities following the global financial crisis. Since 2009, the research has been used in 17 workshops in the UK and China run by the UKTI, the British Consulates-General in China and CBBC. Nearly 1,000 companies, over 200 in China, attended the workshops. British firms took part in business trips to the cities on the location shortlist drawn up by the research. 

Research grants

  1. ESRC Fellowship, (2005). Title: R&D, Knowledge Spillovers and Productivity Growth. M. Kafouros
  2. Project Funded by the EPSRC: Knowledge, Skills and Productivity in Retailing. J Clegg (co-I), I. Grugulis (PI), Dr D.A. Higon, A.M. Williams
  3. Project funded by Nestlé (2008): Value Creation and Sharing by Nestlé: Economic View and Measurement. P. Buckley (PI), N. Forsans, M. Kafouros and H. Voss
  4. Project funded by UK Trade and Investment (UKTI), (2009): Impact of the Current Recession on where British Firms Should be Looking to Trade and Invest Overseas. P. Buckley (PI), A. Cross, M. Kafouros, and H. Voss 

Reports

  1. P. Buckley, F.L.Bartels and G. Mariano.  Multinational Enterprises Foreign Direct Investment Location Decisions within the Global Factory, UNIDO, Vienna, 2009
  2. UK Trade & Investment and China-Britain Business Council, Opportunities for UK Businesses in China’s Regional Cities (authored by the CIBUL team: P. Buckley, J. Clegg, A. Cross and H. Voss.)
  3. UNCTAD. World Investment Report 2011. [Peter Buckley - Principal Consultant]

The research team

Mario Kafouros
Peter Buckley
Jeremy Clegg
Hinrich Voss
Adam Cross
Nicolas Forsans
Hanna Gajewska De Mattos