EMNEs international expansion: home country institutional voids and nonmarket strategy effects

This paper aims to investigate the role of home country institution in affecting outward FDI from Malaysia using data spans from 1980 to 2012. The model specification is examined in autoregressive distributed lag (ARDL) bounds testing framework. The empirical evidence reveals that GDP, exchange rate, openness to trade, and corporate tax rate are the key drivers of outward FDI from Malaysia. This portrays that internationalization strategy of firms is not only relied on home macroeconomic environment, but also home institution. More importantly, corporate tax rate, as one of the institution factors, is positively related to outward FDI which signifies that high tax rate would prompt local firms to engage in investment abroad as a sign of escape response. This reflects that international expansion appears to be exit strategy from home country instead of entry strategy into foreign markets. The findings have some important implications on internationalization strategy of firms.

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Egalitarianism and Lobbying: The Effect of Home-Country Culture on Cross-Border Nonmarket Strategy

SSRN Electronic Journal ◽

10.2139/ssrn.3285609 ◽

2021 ◽

Author(s):

Jin Hyung Kim ◽

Jordan I. Siegel

Keyword(s):

Home Country ◽

Nonmarket Strategy ◽

Cross Border ◽

Country Culture

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Geographic Diversification and the Survival of Born-Globals

Journal of Management ◽

10.1177/0149206316635251 ◽

2016 ◽

Vol 44 (5) ◽

pp. 2008-2036 ◽

Cited By ~ 23

Author(s):

Pankaj C. Patel ◽

Giuseppe Criaco ◽

Lucia Naldi

Keyword(s):

Home Country ◽

Global Scale ◽

Performance Data ◽

Born Globals ◽

International Expansion ◽

Geographic Diversification ◽

Entrepreneurial Opportunities ◽

The Relationship ◽

Industry Conditions ◽

Over Time

The staged internationalization model posits that firms internationalize incrementally over time. However, born-globals are less likely to follow a more gradual model of staged internationalization, and they must decide on the scope of internationalization at their founding to exploit entrepreneurial opportunities on a global scale. Because returns from international expansion must be considered along with the risk of failure, we propose that born-globals’ local industry conditions moderate the relationship between the scope of intraregional diversification (geographic diversification within a region) or interregional diversification (geographic diversification across different regions) and survival. Using a sample of 680 Swedish born-globals founded in 2002, 2003, or 2004 and followed until 2010; data from Swedish Customs; and archival performance data, we find that interregional geographic diversification increases—and that intraregional diversification decreases—the likelihood of failure, which declines further when born-globals undertake intraregional geographic diversification under higher environmental dynamism in the home country industry. Conversely, undertaking interregional geographic diversification even when the home country industry is munificent increases the likelihood of failure (marginally significant). The findings are robust to several alternative specifications.

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Explaining the surge in M&A as an entry mode: home country and cultural influences

International Marketing Review ◽

10.1108/imr-10-2014-0330 ◽

2017 ◽

Vol 34 (1) ◽

pp. 87-108 ◽

Cited By ~ 9

Author(s):

Agyenim Boateng ◽

Min Du ◽

Yan Wang ◽

Chengqi Wang ◽

Mohammad F. Ahammad

Keyword(s):

Interest Rates ◽

Home Country ◽

Emerging Market ◽

Entry Mode ◽

Government Support ◽

Economic Policies ◽

International Expansion ◽

Content Type ◽

The Impact ◽

Expansion Behaviour

Purpose The purpose of this paper is to examine the trends, patterns and the impact of cultural and home country macroeconomic influences on Chinese cross-border mergers and acquisitions (CBM&A) as foreign entry strategy for the period of 1998-2011. Design/methodology/approach Using three regression models, namely, ordinary least squares, the random effects and fixed effects to examine the impact of home country macroeconomic and cultural factors on CBM&A outflows as an entry mode of Chinese firms. The authors check the robustness of the results using system GMM. Findings The findings suggest that CBM&A as a preferred mode of market entry provides a means for obtaining strategic resources to develop competitive advantages for the Chinese emerging market firms. The regression results indicate that home country macroeconomic and cultural variables, including gross domestic product (GDP), liquidity, interest rates, inflation, acquisitions in resource seeking sectors and cultural distance play an important role in explaining the trends of CBM&A outflows by the Chinese firms. Research limitations/implications The results imply that government support to emerging market multinational enterprises (EMEs) to acquire strategic assets and economic policies in the home country play an important role in shaping international expansion behaviour of EMEs through CBM&A. The study demonstrates that outward investments of EMEs are partly a function of the level of economic policies and government support at home. The limitation is that most of the Chinese CBM&A transactions took place in Asia/Pacific locations. Future studies appear warranted if new data become available. Originality/value The study demonstrates how the institutions, strategic asset seeking with government support and economic policies in the home country play important role in shaping international expansion behaviour of emerging market enterprises through CBM&A thereby contributing to the political economy literature and institutional theory. More importantly, the study shows that the level of economic policies and development such as GDP, money supply, interest rates, inflation of the home country are important for EME growth in the international market.

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The influence of home-country institutions on servitization

International Journal of Emerging Markets ◽

10.1108/ijoem-05-2018-0258 ◽

2019 ◽

Vol 15 (4) ◽

pp. 809-828

Author(s):

Hamilton Terni Costa ◽

Fernanda Ribeiro Cahen ◽

Juliana Bonomi Santos

Keyword(s):

Labor Markets ◽

Design Methodology ◽

Home Country ◽

Institutional Voids ◽

Developed Country ◽

Content Type ◽

Future Studies ◽

Emerging Country ◽

Provision Of Services ◽

Institutional Differences

Purpose The purpose of this paper is to explore how home-country institutions influence firms’ servitization decisions. Existing studies have mostly neglected differences across countries and implicitly assumed the servitization process and drivers are homogenous across national institutional environments. The authors challenge this assumption. Design/methodology/approach Using case-based research, the authors explored the influence of formal institutions of the product, financial and labor markets on the servitization of two firms operating in a developed country and two in an emerging country. Findings The absence of robust home-country institutions did not necessarily hinder the servitization process. On the contrary, firms servitizate to overcome the difficulties posed by these institutional voids. The flexibility associated with service offerings enables firms to create viable alternatives to cope with taxes, lack of infrastructure and qualified labor force. Originality/value These outcomes contribute to the servitization literature, which has mainly focused on single-country studies and takes for granted the institutional differences between countries. The findings suggest future studies need to consider how and, to what extent, the country where the company is located influences servitization strategies and processes. Such reflections will improve the inferences made concerning firms’ servitization. For practitioners, the results suggest that the move into the provision of services can be a fruitful strategy to overcome the difficulties faced in emerging markets.

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Institutional contexts, institutional capability and accelerated internationalization of entrepreneurial firms from emerging economies

Nankai Business Review International ◽

10.1108/nbri-05-2016-0016 ◽

2017 ◽

Vol 8 (2) ◽

pp. 231-262 ◽

Cited By ~ 4

Author(s):

Sheng Huang ◽

Guangyu Ye ◽

Jinbo Zhou ◽

Tiantian Jin

Keyword(s):

Host Country ◽

Emerging Economies ◽

Home Country ◽

Entrepreneurial Firms ◽

Institutional Environments ◽

Institutional Voids ◽

Content Type ◽

Institutional Capability ◽

The Relationship

Purpose This paper aims to reveal the influencing mechanism of the interaction between institutional environments in the home and host country on the accelerated internationalization of entrepreneurial enterprises from emerging economies (EE). The authors want to open the black box of home-country institutional environments’ moderating mechanism on the relationship between host-country institutional environments and accelerated internationalization. Design/methodology/approach The authors chose a massive interview method and case study method to answer this question. According to our standards, the authors chose four high-tech companies in Guangdong and Guangxi provinces as case study samples. During investigation in the four case companies, the authors collected print data of 150 pages and electric data of 3 pages. Then, the authors excavated concepts in data through open coding, axial coding and select-type coding and identified concepts’ dimensions and connections between them. Findings Well-developed home-country institutions can reduce the inhibitory effect of under-developed host-country institutions on the accelerated internationalization of entrepreneurial enterprises from emerging economies. Under-developed institutional environments in the home country are beneficial for entrepreneurial enterprises from EE to develop the institutional capability for entrepreneurial enterprises with stronger institutional capability from emerging economies. The inhibitory effect of under-developed institutional environments in the host country on their accelerated internationalization is weaker. The positive moderating role played by institutional voids in the home country on the relationship between institutional voids in the host country and the accelerated internationalization are mediated by the institutional capability of entrepreneurial enterprises from emerging economies. Research limitations/implications The authors just refined the definition of institutional capability and divided its dimensions. Issues such as operationalization of institutional capability and the development of measurement scale are also worthy for future quantitative research. Considering the inherent defect of case study and that these four case companies are from Chinese high-tech industry, the external validity our research may be limited. The theoretical model that was constructed generally captured the relationships between dual institutional environments, institutional capability and EE entrepreneurial firms’ accelerated internationalization decision. Future studies may use a large-scale sample to verify the all propositions the authors introduced to draw more steady and reliable empirical study results. Practical implications The conclusions have significant implications for governments in EE to construct friendly institutional environments for international entrepreneurship and for entrepreneurial firms to implement internationalization strategies. Social implications Policy makers should establish well-developed normative and cognitive institutional environment by cultivating global-orientated and open national culture and organizing experience exchange conference, thereby speeding up the implementation of internationalization strategies and further improving international competitiveness for a country. Originality/value First, the authors defined institutional capability as firms’ ability of establishing relationships with institution actors, adapting to institutional contexts, changing existing institutions or creating new ones to gain potential interests and suggested that it consists of three dimensions. Second, institutional voids in the home country positively moderate the relationship between under-developed institutional environments in the host country and the accelerated internationalization of entrepreneurial firms from EE. At last, institutional capability of firms negatively moderates the relationship between under-developed institutional environments in the host country and the accelerated internationalization of entrepreneurial firms from EE.

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