Greenfield investments or acquisitions? The influence of distance on emerging-market multinationals
ISSN: 0025-1747
Article publication date: 25 September 2018
Issue publication date: 3 May 2019
Abstract
Purpose
In recent years, emerging-market multinationals (EMMs) are receiving significant attention in the international business literature. They represent a challenge for the conventional wisdom, mainly derived from the behavior of developed-country multinationals (MNEs). The purpose of this paper is to analyze how different cross-national distances, namely cultural, administrative, geographic and economic, may affect establishment mode choice by Indian MNEs.
Design/methodology/approach
Data are collected from 328 outward foreign direct investments carried out by Indian MNEs in 73 countries from 1991 to 2014. A binomial logistic regression analysis is used to test the hypotheses.
Findings
The results show that cultural and administrative distances negatively affect the choice of an acquisition. Moreover, firm size, acquisition experience, host country experience, industry, belonging to the G20 alliance and being a state-owned enterprise also influence establishment mode choice.
Originality/value
This is one of the first studies that investigate the relationship between distances and establishment mode choice by Indian MNEs. The findings suggest that they follow a different behavioral pattern among EMMs, since their internationalization decisions are closer to those of developed-country MNEs.
Keywords
Citation
Rienda, L., Claver-Cortes, E., Quer, D. and Andreu, R. (2019), "Greenfield investments or acquisitions? The influence of distance on emerging-market multinationals", Management Decision, Vol. 57 No. 5, pp. 1223-1236. https://doi.org/10.1108/MD-02-2017-0154
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited