Chinese Firms’ Outward FDI Entry Mode Choice: The Role of Ownership and Network

2013 ◽  
Vol 1 (1) ◽  
pp. 108-124 ◽  
Author(s):  
Bai Tao ◽  
Jin Zhanming ◽  
Xiaoguang Qi
Keyword(s):  
Exploratory Study ◽  
Joint Venture ◽  
Mode Choice ◽  
Entry Mode ◽  
Developed Countries ◽  
Outward Fdi ◽  
Entry Modes ◽  
Chinese Firms ◽  
Entry Mode Choice

What determines the Chinese firms’ outward FDI (foreign direct investment) entry mode choice, and do they behave differently from the firms from developed countries? To answer this question, this exploratory study firstly summarizes the attributes of the FDI entry modes, including greenfield investment, acquisition, and joint venture. Further based on the different attributes of these three modes, we analyze how Chinese firms choose the entry mode from the role the ownership and network perspectives, which are the important characteristics of Chinese firms.

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.

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.

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>

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>

scholarly journals The role of international experience in speed of entry: Empirical evidence from Chinese innovative firms

2021 ◽  
Vol 275 ◽  
pp. 03001
Author(s):  
Hongping Du ◽  
Maoyan She ◽  
Xuan Yu
Keyword(s):  
Developing Countries ◽  
Host Country ◽  
Location Choice ◽  
Mode Choice ◽  
Entry Mode ◽  
Developed Countries ◽  
Entry Modes ◽  
Entry Mode Choice ◽  
Market Location ◽  
Innovative Firms

By analyzing the dynamic path of internationalization, this study attempts to explain the entry mode choice, location choice, and speed of entry in the process of internationalization from the learning results obtained from previous international activities. Our research shows that the speed of the entry process depends on the type of experiential learning generated by the implicit decision-making in the process of Internationalization: the entry mode choice and the market location choice. We find that the experience accumulated in the host country has an inverted U-shaped effect on the speed of entry; while the experience accumulated of the entry mode has a U-shaped impact on the speed of entry. We perform an event history analyses(EHA) on 153 Chinese innovative firms with 905 OFDI observations during the period from 1991 to 2015, and analysis what and why is the paths of internationalization of Chinese firms. We find that Chinese innovative MNEs have more likelihood to choice the entry mode of acquisition and WOS than other entry modes in OFDI activity, and there is a higher probability that the Chinese innovative MNEs choice the market location of developed countries than developing countries in OFDI activity. Most importantly, we find that accumulated experience in host country has an inverted U-shaped impact on the speed of internationalization operation with acquisition mode and the speed of internationalization in developed countries; while accumulated experience in focal entry mode has an U-shaped impect on the speed of internationalization operation with branch or WOS mode and the speed of internationalization in developing countries. This claim is supported by both non-parametric and parametric tests in the EHA. Our research highlights the short-term and long-term consequences of different types of paths associated with the internationalization process.

Sign in / Sign up

Export Citation Format

Share Document