scholarly journals Foreign sequential entry mode choice

2018 ◽  
Vol 13 (4) ◽  
pp. 544-563 ◽  
Author(s):  
Gangxiang Xu ◽  
Bin Guo ◽  
Wen Li ◽  
Xiaoting Wang
Keyword(s):  
Multinational Firms ◽  
Joint Venture ◽  
Mode Choice ◽  
Theoretical Perspective ◽  
Entry Mode ◽  
Content Type ◽  
Listed Firms ◽  
Entry Mode Choice ◽  
Sequential Entry ◽  
Structural Inertia

Purpose The purpose of this paper is to use the theoretical perspective of structural inertia as a unique lens to study foreign sequential entry mode choices of multinational firms. Design/methodology/approach It adopts quantitative analysis of a sample of 121 Chinese publicly listed firms with 564 foreign entry incidents in the 2001-2012 period to test the hypotheses. Findings The empirical results show that multinational firms have a tendency to adopt the same mode in the subsequent entry as the number of prior entry mode choice of a given type (joint venture (JV) in this study) increases. The results support the theoretical prediction that organizations repeat their past activities due to structural inertia. Moreover, such an inertia effect in foreign sequential entry mode choices becomes stronger for older multinational firms, larger multinational firms and state-owned multinational firms. Research limitations/implications Consistent with existing research, this study focuses on the entry mode choice between JV and wholly owned subsidiaries. However, it is better to examine the relationship identified in the study for different types of entry mode choices to assess result generalizability. Practical implications It reminds managers of multinational firms that they should be cautious to the influence of structural inertia that can be a barrier to strategic flexibility when they make entry mode choices. Originality/value The main contribution of this study resides in introducing structural inertia perspective to help understand the determinants of foreign sequential entry mode choices of multinational firms.

How do linking, leveraging and learning capabilities influence the entry mode choice for multinational firms from emerging markets?

2017 ◽  
Vol 12 (2) ◽  
pp. 171-193 ◽  
Author(s):  
Wen Li ◽  
Bin Guo ◽  
Gangxiang Xu
Keyword(s):  
Emerging Markets ◽  
Host Country ◽  
Multinational Firms ◽  
Cultural Distance ◽  
Mode Choice ◽  
Entry Mode ◽  
Content Type ◽  
Entry Mode Choice ◽  
Learning Capabilities ◽  
The Relationship

Purpose Based on the linkage-leverage-learning (LLL) framework developed by Mathews (2006), the purpose of this paper is to examine how linking, leveraging and learning capabilities influence the choice of foreign-entry mode, and the way such influences are contingent on context factors in the emerging markets. Design/methodology/approach Contrary to a prior literature applying the LLL framework, which mainly used case studies, this paper adopts a quantitative approach and is based on a sample of 321 Chinese listed companies to test the hypotheses. Findings The results show that multinational firms from emerging markets (EMFs) with stronger LLL capabilities are more likely to choose the wholly owned mode in foreign entries. In addition, the relationship between linking capability and wholly owned entry mode choice is weaker at higher levels of cultural distance between home and host country. At the same time, the relationship between learning capability and wholly owned entry mode choice is weaker at higher levels of cultural distance between home and host country, and of institutional distance between prior entries and the focal entry. Research limitations/implications An entry mode strategy for firms without ownership advantages and the identification of boundary conditions for applying different LLL capabilities are recommended. The generalizability of the findings from a single-country setting still needs further validation with other emerging economies. Originality/value This paper treats internationalization of firms from emerging countries with a different perspective. The underlying idea in this study is that internationalization is not only a process for EMFs to utilize externally accessible assets abroad, but also a process of simultaneously combining internationalization with experiential learning and capability utilization in overseas markets. In addition, the authors also contribute to the literature by providing strong empirical evidence for validating the LLL model and extending the existing entry mode studies.

Governance, privatization and foreign direct investment

2018 ◽  
Vol 9 (4) ◽  
pp. 569-586
Author(s):  
Dongling Cai ◽  
Leonard Fengsheng Wang ◽  
Xiaokai Wu
Keyword(s):  
Social Welfare ◽  
Host Country ◽  
Foreign Firm ◽  
Mode Choice ◽  
Entry Mode ◽  
Mixed Duopoly ◽  
Economic Governance ◽  
Content Type ◽  
Entry Mode Choice ◽  
Optimal Degree

Purpose The purpose of this study is to investigate the interplay between economic governance and privatization, and how these two instruments affect the entry mode choice of the foreign firm and the social welfare of the host country. Design/methodology/approach This study constructs a mixed duopoly model wherein one domestic public firm competes with a foreign firm and investigates the influence of economic governance investment on the domestic government’s optimal degree of privatization choice and the foreign firm’s entry mode choice. Findings This study shows that (1) better economic governance enhances the effect of privatization on output, thus resulting in a lower degree of privatization; (2) the optimal privatization policy of the domestic government is partial privatization irrespective of the foreign firm’s entry mode choice; (3) with optimal investment by the domestic government on economic governance, the optimal degree of privatization is higher under FDI than export, and the host-country welfare is also higher under FDI. In particular, this study demonstrates that better economic governance decreases the threshold of the degree of privatization when the foreign firm switches from export to FDI, implying that better economic governance stimulates the foreign firm to undertake FDI in the host country. Practical implications The findings shed some light on both the mixed ownership reform of the SOEs in China and attracting foreign capital inflow to improve the host country’s social welfare. Originality/value To the best of the authors’ knowledge, this study constitutes the first attempt to build a theoretical framework to explore how the interactions between economic governance and privatization influence the entry mode choice of the foreign firm.

Foreign Business Environments and Entry Mode Choice

2012 ◽  
pp. 165-181
Author(s):  
Maud Oortwijn
Keyword(s):  
Host Country ◽  
Joint Venture ◽  
Mode Choice ◽  
External Environment ◽  
Entry Mode ◽  
Entry Modes ◽  
Host Countries ◽  
Entry Mode Choice ◽  
Business Studies ◽  
Business Environments

The entry mode choice is at the core of International Business studies (Oortwijn, 2011a). IB research concerns the organization of firm activities across country borders and thus across different cultures and business contexts. These host country differences impact the firm’s way of working internally within the organization and in interaction with the external environment in the host country. Companies can consider a broad range of entry modes to organize across country borders, including partnership, trade, joint venture (JV), and wholly owned enterprise (WOE). The entry mode defines what activities are internalized within the firm and how the firm interacts with the external environment in different host countries.

scholarly journals The Paths of Internationalization of Chinese Innovative Firms

2020 ◽  
Vol 12 (6) ◽  
pp. 2575
Author(s):  
Hongping Du ◽  
Liliana Mitkova ◽  
Na Wang
Keyword(s):  
Developing Countries ◽  
Joint Venture ◽  
Mode Choice ◽  
Entry Mode ◽  
Developed Countries ◽  
Future Research ◽  
Entry Mode Choice ◽  
Market Location ◽  
Wholly Owned Subsidiary ◽  
Entry Speed

Innovative enterprises from emerging markets, such as China, are a group of understudied enterprises, which could generate new and important views on internationalization. Some unique characteristics of Chinese innovative enterprises are creating new ideas that help to a better understanding of entry mode choice, market location choice, and entry speed in the paths of internationalization. Drawing on an unbalanced panel of Chinese innovative enterprises’ outward foreign direct investment (OFDI) event data, we analyzed the tendency of the paths of internationalization of Chinese innovative enterprises and the determining factors that influence the Chinese innovative enterprises’ choice in entry mode, market location, and entry speed. The results show that: (1) Chinese innovative enterprises are more likely to choose developing countries than developed countries. (2) When these firms conduct investment activities in developed countries, the probability rank (from high to low) of entry mode choice is acquisition, along with the wholly-owned subsidiary, exporting and joint venture. When these firms expand the business in developing countries, the entry mode of export is most likely to be chosen and the acquisition is least likely to be chosen. (3) This tendency and paths choice of internationalization in entry mode, market location and entry speed are influenced by the international experience, the multidimensional proximity, psychic distance, internationalization motivation, ownership structure, and innovation ability. Finally, we discuss these contributions and make some suggestions for future research.

CEO characteristics and SME foreign market entry mode choice

2016 ◽  
Vol 33 (2) ◽  
pp. 246-275 ◽  
Author(s):  
Katharina Laufs ◽  
Michael Bembom ◽  
Christian Schwens
Keyword(s):  
Host Country ◽  
Market Entry ◽  
Mode Choice ◽  
Entry Mode ◽  
Foreign Market ◽  
Foreign Market Entry ◽  
Content Type ◽  
Entry Mode Choice ◽  
Foreign Market Entry Mode ◽  
Ceo Characteristics

Purpose – Using arguments from the upper echelons perspective this paper aims to examine the impact of CEO characteristics on small and medium-sized enterprises’ (SMEs’) equity foreign market entry mode choice and how these associations are jointly moderated by geographic experience of the firm and host-country political risk. Design/methodology/approach – The empirical analysis draws on data gathered from German SMEs testing triple-interaction effects between CEO’s age, firm tenure and international experience, geographic experience of the firm (organizational level), and host-country political risk (environmental level). Findings – Empirical findings validate that the influence of CEO’s age and firm tenure on SME foreign market entry mode choice varies by managers’ level of managerial discretion (i.e. latitude of action) as determined by the SME’s geographic experience and the level of political risks prevailing in the foreign market. Practical implications – Empirical findings help SME owners and managers to understand how CEO’s age and firm tenure are related with individual’s risk-taking behavior and information-processing demands and how these contingencies vary by the context in which the individual CEO is nested. Originality/value – This study contributes to the growing body of literature focussing on SME foreign market entry mode choice by emphasizing the important role of CEOs in the decision to internationalize. More specific, this study contributes by an examination of the interactive effect of CEO’s age, firm tenure and international experience, geographic experience of the firm and host-country political risk and, therefore, emphasizes the context and boundary conditions under which the association between CEO characteristics and foreign market entry mode choice is more or less pronounced.

scholarly journals Determinants of EMNEs’ Entry Mode Decision with Environmental Volatility Issues: A Review and Research Agenda

2021 ◽  
Vol 14 (10) ◽  
pp. 500
Author(s):  
Yameng Li ◽  
Ruosu Gao ◽  
Jingyi Wang
Keyword(s):  
Environmental Factors ◽  
Multinational Enterprises ◽  
Joint Venture ◽  
Emerging Market ◽  
Mode Choice ◽  
Entry Mode ◽  
Vital Role ◽  
Entry Modes ◽  
Entry Mode Choice ◽  
Country Level

Emerging market multinational enterprises (EMNEs) play a vital role in global economic development and usually adopt aggressive internationalization strategies. However, the volatile global environment has caused EMNEs to face various risks in their overseas expansion. To maximize the competitive advantages and achieve successful expansion, EMNEs should choose the most suitable foreign entry mode. Therefore, EMNEs need to understand what environmental factors affect their decision-making and how they influence the choice of entry modes, especially in a volatile environment. This review examines 44 selected journal articles from 1996 to June 2021 on the environmental volatility determinants of EMNEs’ entry mode choice. The entry mode choice we examined is mainly wholly-owned subsidiary versus international joint venture. We categorized the environmental volatility determinants investigated in the literature we reviewed into country-level factors (such as cross-national distance) and industry-level factors (such as industry condition). The main contributions are: (1) the review reveals three research gaps in extant studies, which are lack of research on external environmental factors, lack of research on multinationals from less concerning emerging economies, and lack of research on small-to-medium (SMEs) enterprises. (2) Practically, the study highlights the importance of understanding external environmental factors for EMNEs to make the most suitable entry mode decisions.

Interorganizational network on top management team – entry mode choice relationship

2018 ◽  
Vol 11 (4) ◽  
pp. 301-322
Author(s):  
Subhasree Mukherjee ◽  
Deepak Dhayanithy
Keyword(s):  
Mode Choice ◽  
Top Management Team ◽  
Entry Mode ◽  
Moderating Effect ◽  
Management Team ◽  
Interorganizational Network ◽  
Entry Modes ◽  
Content Type ◽  
Entry Mode Choice ◽  
Full Control

Purpose By applying upper echelons perspective to the choice of full or shared control entry modes, this study aims to explore the moderating effect of interorganizational network on the top management team (TMT) characteristics and entry mode choice relationship. Existing studies on TMT’s demographic characters’ influence on entry mode choice remains inconclusive. The implicit assumption in extant literature is that firms share similar network structural advantages. This study integrates the largely ignored, network structural concept with entry mode to show how firm-level decisions are the outcome of interaction between internal and external environment. Design/methodology/approach The interorganizational network is modeled using board interlock data. The moderating effect of network is modeled on network size, centrality of the firms and density of ties, considering tenure and international experience of the upper echelons. The hypotheses are tested based on a sample of 83 publicly listed Indian firms from 2012 to 2015. Findings The findings indicate that despite a high international experienced TMT’s preference of full control entry mode, the high central position of the firm can influence the decision against full control entry modes. However, the choice of full control entry mode is also enhanced by the density of firm’s network. Similar evidence is also observed with tenure variable as well where the moderating variables showed a trend toward influencing the entry mode choices. Originality/value Thus, this study attempted to reconcile the inconsistencies prevalent in the relationship between TMT variables and choice of entry mode by introducing the contextual factor of interorganizational networks.

Institutional distance and international ownership strategies in Russia

2014 ◽  
Vol 9 (3) ◽  
pp. 254-276 ◽  
Author(s):  
Päivi Karhunen ◽  
Riitta Kosonen ◽  
Svetlana Ledyaeva
Keyword(s):  
Home Country ◽  
Mode Choice ◽  
Entry Mode ◽  
Foreign Ownership ◽  
Institutional Distance ◽  
Russian Regions ◽  
Content Type ◽  
Entry Mode Choice ◽  
Foreign Entry ◽  
The Impact

Purpose – The purpose of this paper is to analyse the impact of institutional distance, extended to capture subnational institutional variation, on foreign entry mode choice. Design/methodology/approach – As an empirical study, it focuses on manufacturing firms established in Russia by foreign investors from developed countries. The dependent variables, the share of foreign ownership and the entry mode choice binary variable (equal to 1 for full foreign ownership and zero for a joint venture) were obtained from the registry of foreign-owned firms in Russia. The World Bank's regulatory quality (RQ) index on a national level and a respective indicator for the various Russian regions on a subnational level were utilised to measure institutions. Multilevel cross-classified analysis including foreign firms, the various Russian regions and characteristics of the foreign owners’ home countries was applied to for making empirical estimations. Findings – The empirical results show, first, that the regionally adjusted institutional distance, i.e. the distance between the home country and the Russian region in question, when measured in terms of RQ, shifts the ownership structure towards shared ownership. However, nation-level institutional distance between the home country and Russia does not show any statistically significant relationship with the modal choice. Originality/value – The results indicate that with the exception of industries of strategic importance to the state, the most important “rules of the game” for foreign entry strategies are provided not by the federal government but by the regional governors. The theoretical value of the paper lies in the extension of the institutional distance concept to the subnational level. At the same time, the paper identifies those institutional features that foreign entrants eyeing Russia need to take into account when selecting an entry mode and location within Russia.

scholarly journals The effect of institutions and failure-based learning on entry mode choice

2021 ◽  
Author(s):  
◽  
Naghmeh Kargozar
Keyword(s):  
Host Country ◽  
Joint Venture ◽  
Mode Choice ◽  
Entry Mode ◽  
Organisational Learning ◽  
Influential Factor ◽  
Foreign Firms ◽  
Entry Modes ◽  
Institutional Perspective ◽  
Entry Mode Choice

<p>This study investigates the role of learning from failures and how learning from failure of others shapes the entry mode choice of subsequent entrants – a choice between joint venture (JV) and wholly owned subsidiary (WOS). A review of the entry modes and institutional perspective literature has revealed that research to date has focused on the effect of successes rather than failures. While it recognises the effect of other firms’ entry mode on the entry mode decisions of subsequent entrants, it has overlooked the influence of failures’ on entry mode. It is important to investigate the effect of failure of other firms since it has been recognised by organisational learning scholars as a valuable source of information for firms to improve their performance, decrease their uncertainty and consequently influences their actions.  Therefore, the present research applies institutional and organisational learning perspectives as the underpinning theories to examine how the failure of others determines the entry mode choice of a firm. Further investigation was carried out on how a firm’s entry mode decision in response to regulative and normative institutions might be asymmetric. Additionally, firms’ responses to institutional dimensions were analysed further by investigating how they would change with experience in the host country and in other foreign countries.  This study applied a quantitative approach to answer these questions in the context of China. The data for this study consists of 1021 observations invested by 622 foreign firms from 2003 to 2012. Through a logistic regression analysis, this study found that the failure of prior entrants with JV structure increases a new entrant’s tendency to choose JV over WOS. Moreover, regulative distance negatively influences the choice of JV whereas the effect of normative distance was found to be positive. Regarding the effect of experience, host country experience was found to be an influential factor that mitigates the effect of regulative and normative distance on the entry mode choice.  The findings of the present research contribute to both institutional and entry mode literature by demonstrating that firms make their entry mode decisions based on information inferred from prior entrants’ failures. This research also contributes to organisational learning literature by showing that responses to failures are not merely avoidance-based, but rather based on the firm’s evaluation of the cause of failure.</p>

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