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Article
Publication date: 2 January 2018

Laura Rienda, Enrique Claver and Diego Quer

Focusing on the growing importance of Indian multinational corporations in the past decades, this paper aims to understand how establishment mode decisions in a foreign…

Abstract

Purpose

Focusing on the growing importance of Indian multinational corporations in the past decades, this paper aims to understand how establishment mode decisions in a foreign market can differ depending on a series of factors. Specifically, the authors examine how institutional distance, including cultural distance and political risk, could affect these decisions, and how international acquisition experience could moderate this relationship.

Design/methodology/approach

The authors test their hypotheses using data from 114 outward foreign direct investments between 2000 and 2010.

Findings

The findings suggest that experience in international acquisitions increases the likelihood of subsequent acquisitions in high-risk and culturally distant countries.

Originality/value

By considering that the country of origin also matters, some differences among emerging-market multinational corporations (MNCs) may arise. Besides, since empirical research focusing on emerging-market MNCs is scarce, more empirical studies are needed to analyze the influence of cultural distance and political risk on some decisions. In the case of India, there are also additional motivations for analyzing those institutional factors. First, since this is a country with significant linkages to Western countries, it is interesting to know if the influence of cultural distance is similar or not. Second, there is a lack of empirical evidence on the relationship between political risk and establishment mode choice in the case of Indian MNCs. To fill this gap, the first aim of this paper is to analyze how cultural distance and political risk affect the establishment mode choice of Indian MNCs. Moreover, recognizing international experience to be an important factor in explaining international expansion, we focus on international experience interactions with sources of uncertainty inherent in the host market.

Details

Journal of Asia Business Studies, vol. 12 no. 1
Type: Research Article
ISSN: 1558-7894

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Article
Publication date: 16 July 2018

Diego Quer, Enrique Claver and Laura Rienda

Drawing on the institutional perspective, the purpose of this paper is to investigate how state ownership moderates the relationships between political risk, inertia and…

Abstract

Purpose

Drawing on the institutional perspective, the purpose of this paper is to investigate how state ownership moderates the relationships between political risk, inertia and mimetic behavior, and the location choice of Chinese multinational enterprises (MNEs).

Design/methodology/approach

The authors argue that state ownership leads Chinese firms to behave toward political risk in an unconventional way, and that government support makes them less dependent on their own and other Chinese firms’ prior host country experience. The authors tested the hypotheses using data on outward foreign direct investment (OFDI) decisions made by 186 Chinese firms in 93 countries.

Findings

The authors found that Chinese state-owned enterprises (SOEs), compared to non-SOEs, are more likely to move into countries with high political risk, and that they are less likely to be inertial and mimetic.

Originality/value

Building on the distinction between macro- and micro-political risk, The authors contribute to the political risk literature by developing several arguments that explains why political risk varies across investing firms in a given host country. Moreover, this is one of the first studies of its kind to investigate the moderating effect of state ownership on the relationship between inertial and mimetic behavior, and the location choice of Chinese MNEs.

Details

International Journal of Emerging Markets, vol. 13 no. 3
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 4 March 2019

Diego Quer, Laura Rienda, Rosario Andreu and Si Miao

The conventional wisdom suggests that the lack of prior host country-specific experience and a higher institutional distance deter multinational enterprises (MNEs) from…

Abstract

Purpose

The conventional wisdom suggests that the lack of prior host country-specific experience and a higher institutional distance deter multinational enterprises (MNEs) from entering a foreign country. However, past studies report that Chinese MNEs show an unconventional risk-taking behavior choosing foreign locations, where they have no prior experience or there is an increased institutional distance. Drawing on the institutional theory, the purpose of this paper is to argue that Chinese Government official visits to the host country may act as a risk-reduction device, thus providing an explanation for such an unconventional behavior.

Design/methodology/approach

The authors develop two hypotheses regarding how Chinese Government official visits moderate the impact of host country-specific experience and institutional distance on the location choice of Chinese MNEs. The authors test the hypotheses using a sample of investment location decisions by Chinese MNEs in Latin America.

Findings

The authors find that government official visits mitigate the lack of firm’s prior host country experience. However, only high-level government visits reduce institutional distance.

Originality/value

The authors contribute to the international business literature by analyzing how home country government diplomatic activities may pave the way of host country institutional environment for foreign MNEs from that home country. In addition, the authors provide an additional explanation for the unconventional risk-taking behavior of Chinese MNEs. Finally, the authors also contribute to a better understanding of the decision-making process of emerging-market MNEs entering other emerging economies.

Details

Cross Cultural & Strategic Management, vol. 26 no. 1
Type: Research Article
ISSN: 2059-5794

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Article
Publication date: 9 September 2021

Diego Quer and Rosario Andreu

The Belt and Road Initiative (BRI), an ambitious plan led by the Chinese government aiming to reach a close integration between countries, is reshaping the global…

Abstract

Purpose

The Belt and Road Initiative (BRI), an ambitious plan led by the Chinese government aiming to reach a close integration between countries, is reshaping the global institutional landscape. Chinese state-owned enterprises (SOEs) play a leading role in the BRI and they usually follow an unconventional behavior derived from the institutional influence of their home government. Prior research reports that institutional distance between home and host countries has an impact on multinational enterprises’ (MNEs’) ownership level in their foreign subsidiaries. Therefore, our aim is to investigate how institutional distance, the BRI and state ownership affect Chinese tourism MNEs' ownership level in their cross-border acquisitions.

Design/methodology/approach

Drawing on the institutional theory, this study develops several hypotheses that are tested using a sample of Chinese MNEs from accommodation, travel agencies, transport and leisure/entertainment industries.

Findings

The results show that the idiosyncratic characteristics of being an emerging-market MNE belonging to a soft-service industry is associated with a positive relationship between institutional distance and a high ownership level in cross-border acquisitions. They also indicate that targeting a country included in the BRI and being an SOE negatively moderates that relationship.

Originality/value

This study extends institutional theory in the case of tourism firms from an emerging economy. It also addresses an under-research topic in the literature, namely, how the BRI is leading Chinese tourism MNEs to redesign their international strategies.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 25 September 2018

Laura Rienda, Enrique Claver-Cortes, Diego Quer and Rosario Andreu

In recent years, emerging-market multinationals (EMMs) are receiving significant attention in the international business literature. They represent a challenge for the…

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.

Details

Management Decision, vol. 57 no. 5
Type: Research Article
ISSN: 0025-1747

Keywords

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Book part
Publication date: 23 November 2017

Diego Quer, Enrique Claver and Laura Rienda

Outward foreign direct investment (FDI) from emerging economies, in particular from China and India, is on the rise. As a result, the international expansion of…

Abstract

Outward foreign direct investment (FDI) from emerging economies, in particular from China and India, is on the rise. As a result, the international expansion of emerging-market multinational enterprises (MNEs) is attracting growing attention among scholars. However, existing research comparing the location patterns of Chinese and Indian MNEs is still scant. In order to fill this gap, we aim to analyze the impact of political risk and cultural distance on the location choice of Chinese and Indian MNEs. Drawing on an institutional approach, we propose several hypotheses regarding the influence of political risk and cultural distance on location decisions. We test our hypotheses using a sample of FDIs carried out by Chinese and Indian MNEs. Our findings suggest that the behavior of Chinese MNEs is less conventional than that of their Indian counterparts when facing institutional obstacles in host countries. Previous papers dealing with location decisions of China’s and India’s outward FDI did not specifically address the impact of political risk and cultural distance. This comparative study provides new empirical evidence on the influence of these traditional host country institutional factors.

Details

Distance in International Business: Concept, Cost and Value
Type: Book
ISBN: 978-1-78743-718-0

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Book part
Publication date: 25 October 2014

Diego Quer-Ramón, Enrique Claver-Cortés and Laura Rienda-García

Since the beginning of the 21st century, China’s outward foreign direct investment (OFDI) is growing steadily and Chinese multinationals (MNCs) are playing an increasingly…

Abstract

Purpose

Since the beginning of the 21st century, China’s outward foreign direct investment (OFDI) is growing steadily and Chinese multinationals (MNCs) are playing an increasingly important role in the global economy. Thus, the number of papers focusing on China’s OFDI and Chinese MNCs has been increasing during the last years. The aim of this chapter is to carry out a review of the empirical papers dealing with Chinese MNCs published between 2002 and 2012 in high-impact international business and management journals.

Design/methodology/approach

This chapter reviews 43 empirical papers focusing on Chinese MNCs that were published in nine major scholarly journals between 2002 and 2012.

Findings

We report individual and institutional contributions, the theories and methods used, the research topics, and the main findings. We also discuss implications for future research.

Originality/value

Some previous literature reviews have dealt with research on China’s OFDI and Chinese MNCs. Nevertheless, none of the earlier reviews dealt specifically with empirical papers; neither did they provide an analysis of both individual and institutional contributions.

Details

Multinational Enterprises, Markets and Institutional Diversity
Type: Book
ISBN: 978-1-78441-421-4

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Article
Publication date: 6 April 2010

Diego Quer, Enrique Claver and Laura Rienda

The number of papers focusing on foreign companies doing business in China has increased significantly since the open‐door policy came into effect in the late 1970s…

Abstract

Purpose

The number of papers focusing on foreign companies doing business in China has increased significantly since the open‐door policy came into effect in the late 1970s. Performance has been one of the most researched topics. This paper aims to carry out a review of the empirical papers which have analysed the performance drivers of foreign companies in mainland China.

Design/methodology/approach

The paper reviews 62 empirical papers dealing with the performance of foreign firms in mainland China, published in ten leading international academic journals between 1978 and 2006.

Findings

An analysis of the main findings is offered, along with a summary of the theoretical approaches, methodologies, samples and performance measures used.

Originality/value

The paper identifies the factors which contribute to greater performance in mainland China. Although other studies have reviewed the literature in the Chinese context, none had specifically tackled this topic through a comprehensive review.

Details

Chinese Management Studies, vol. 4 no. 1
Type: Research Article
ISSN: 1750-614X

Keywords

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Article
Publication date: 28 September 2010

Diego Quer, Enrique Claver and Laura Rienda

In recent years, China and India have been experiencing a process of economic and social transformation that is unprecedented in recent human history. The consequences of…

Abstract

Purpose

In recent years, China and India have been experiencing a process of economic and social transformation that is unprecedented in recent human history. The consequences of the spectacular resurgence of these two Asian giants are profound and far‐reaching, and are causing the centre of gravity of the world economy to be drawn inexorably toward these countries. The aim of this paper is to offer a comparative approach to the reality of China and India as regards business and strategic management.

Design/methodology/approach

The paper reviews previous literature that has focused on comparing various issues related to business and management in China and India.

Findings

The paper highlights the points of convergence and divergence in the developmental patterns of China and India, the key factors for success in each country, the entry modes that could be used and the business opportunities they offer.

Originality/value

The paper provides a comparison between China and India with regard to business and strategic management, analysing the main similarities and differences between the two Asian giants.

Details

Asia-Pacific Journal of Business Administration, vol. 2 no. 2
Type: Research Article
ISSN: 1757-4323

Keywords

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Article
Publication date: 1 April 2004

Enrique Claver‐Cortés, José F. Molina‐Azorín and Diego Quer‐Ramón

A central theme in the strategic groups literature is the theoretical relationship between groups and firm performance. The empirical evidence is conflicting, however. The…

Abstract

A central theme in the strategic groups literature is the theoretical relationship between groups and firm performance. The empirical evidence is conflicting, however. The aim of this research is to study this linkage through two analyses. Thus, the analysis that has been traditionally used – performance differences between groups – is complemented with an analysis of performance differences within each group. To set up strategic groups, we analyze firms operating in the construction industry, using specific variables associated with generic strategies.

Details

Management Research: Journal of the Iberoamerican Academy of Management, vol. 2 no. 1
Type: Research Article
ISSN: 1536-5433

Keywords

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