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Article
Publication date: 12 May 2020

Anders Pehrsson

Establishment of wholly owned subsidiaries in a foreign market is central to international marketing because sole ownership and high commitment facilitate firm's marketing…

Abstract

Purpose

Establishment of wholly owned subsidiaries in a foreign market is central to international marketing because sole ownership and high commitment facilitate firm's marketing in the local market. Drawing on knowledge-based theory, this study extends the current understanding of firm's sequential establishments of wholly owned subsidiaries in a host country.

Design/methodology/approach

Swedish firms' establishments of wholly owned subsidiaries in Germany, the United Kingdom and the United States were analyzed using a longitudinal approach.

Findings

A firm's broad international experience is associated with an acquisition in any phase, while mode experience and value-adding experience are associated with postinitial acquisitions. There is no association between mode experience and greenfield investments.

Research limitations/implications

Knowledge-based theory explains a firm's choice of establishment mode when establishing in the same host country. Effects of marketing experiences are due to the establishment mode and different experiences explain choices for initial and postinitial establishments.

Practical implications

In choosing between a wholly owned subsidiary in terms of an acquisition or a greenfield investment, for a foreign establishment the firm is advised to consider the impact of marketing experiences and establishment phase.

Originality/value

Research is needed on how experiences affect choices between foreign establishment modes where the firm is the sole owner. This study is the first to focus on the choice between wholly owned subsidiaries in terms of acquisitions and greenfield investments, and the impact of experience and phase of establishment in a particular host country.

Details

International Marketing Review, vol. 37 no. 2
Type: Research Article
ISSN: 0265-1335

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Article
Publication date: 21 September 2015

Samuel Ato Dadzie and Richard Afriyie Owusu

The purpose of this paper is to analyse the foreign direct investment (FDI) strategies of manufacturing firms in Ghana using the eclectic model in order to understand how…

Abstract

Purpose

The purpose of this paper is to analyse the foreign direct investment (FDI) strategies of manufacturing firms in Ghana using the eclectic model in order to understand how ownership, location and internalization factors impact FDI to developing countries like Ghana.

Design/methodology/approach

The authors use a quantitative methodology in order to statistically explore the relationships between dependent and independent variables. The data comes from a sample of 75 multinational enterprises that invested in the manufacturing sector between 1994 and 2008.

Findings

The results reveal that large firm size, extensive international experience and large market size lead to the choice of acquisition mode of entry, while high cultural distance, high country risk, high proprietary assets and incentives lead to the choice of greenfield mode in the context of Ghana.

Research limitations/implications

The results imply that the different economic, business and legal (locational) conditions of developing countries create different FDI strategies and paths of companies compared to developed markets.

Practical implications

Policy makers in developing countries should make efforts to improve market size, the institutional and regulatory environment, as well as the availability of human capital in order to attract FDI.

Originality/value

FDI studies have mainly analysed establishment mode strategies of firms in advanced markets. There is an increasing amount of research on FDI in emerging markets but very little on developing countries and African markets. Therefore, this study enables the authors to develop implications for existing theory and generate practical implications for firms and policy makers related to African and developing country markets.

Details

International Journal of Emerging Markets, vol. 10 no. 4
Type: Research Article
ISSN: 1746-8809

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Abstract

Details

Internationalization of Firms: The Role of Institutional Distance on Location and Entry mode
Type: Book
ISBN: 978-1-78714-134-6

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Abstract

Details

Internationalization of Firms: The Role of Institutional Distance on Location and Entry mode
Type: Book
ISBN: 978-1-78714-134-6

Content available
Book part
Publication date: 14 February 2017

Laura Vanoli Parietti

Abstract

Details

Internationalization of Firms: The Role of Institutional Distance on Location and Entry mode
Type: Book
ISBN: 978-1-78714-134-6

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Article
Publication date: 7 August 2017

Dessislava Dikova, Arjen van Witteloostuijn and Simon Parker

Extant work in international business (IB) involves a partial contingency-theoretic perspective: a holistic view of the impact of bundles of contingencies on an outcome…

Abstract

Purpose

Extant work in international business (IB) involves a partial contingency-theoretic perspective: a holistic view of the impact of bundles of contingencies on an outcome variable is missing. The purpose of this paper is to adopt a contingency approach to study multinational enterprise (MNE) subsidiary performance in the appropriate context of European transition economies at the beginning of the current millennium.

Design/methodology/approach

Methodologically, the authors introduce abduction as a line of inquiry into IB and management to develop new theoretical insights, and apply the novel empirical general interaction method to estimate bundle effects. In so doing, the authors contribute to the further development of a theoretical and empirical toolkit to revitalize holistic, or configurational, quantitative research in IB and management.

Findings

The authors find that capability fit is a necessary condition for high MNE subsidiary marketing performance, whilst environment fit is particularly critical for high MNE subsidiary financial performance.

Research limitations/implications

A key limitation is that this is a cross-section study.

Practical implications

This study offers insights as to subsidiary fit into Eastern Europe, indicating fitting entry and establishment modes.

Originality/value

This paper offers a novel holistic approach to IB, both in terms of theoretical and empirical methodology.

Details

Cross Cultural & Strategic Management, vol. 24 no. 3
Type: Research Article
ISSN: 2059-5794

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Article
Publication date: 12 August 2014

Gabriel Vouga Chueke and Felipe Mendes Borini

The purpose of this paper is to examine the influence of institutional distance, firm and industry characteristics on the establishment mode strategy of Brazilian…

Abstract

Purpose

The purpose of this paper is to examine the influence of institutional distance, firm and industry characteristics on the establishment mode strategy of Brazilian multinationals – the choice between an acquisition and a greenfield investment.

Design/methodology/approach

The authors build upon the recently developed of Institutional Theory an analytical framework, decomposing the institutional distance between formal institutions (economic, financial, political, administrative, demographic, geographic and knowledge distance) and informal institution (cultural distance), and we used control variables related to firm and industry levels.

Findings

The results suggest a possible association between entry by acquisition and factors related to the firm-level and formal institution (financial, political and demographic distance). Findings also suggest a strong relationship between greenfield investments and informal institution (cultural distance) and industry-level factors.

Praticallimitations

The authors believe that the managers of Brazilian companies should use the variables adopted in this study as criteria to identify the factors that influence entry strategy abroad.

Socialimplications

Another possible contribution concerns the scope of the government because results demonstrated the weight that formal institutions place on the entry process into foreign countries.

Originality/value

This study contributes to the ongoing academic discussion regarding entry modes in different ways. First, this study contributes, given the novelty of its proposal: no quantitative studies were found to have analyzed establishment mode choice in Brazil. Another contribution is the finding related to the association between entry mode and institutional distance between countries.

Details

Management Research: The Journal of the Iberoamerican Academy of Management, vol. 12 no. 2
Type: Research Article
ISSN: 1536-5433

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Book part
Publication date: 10 September 2018

Maria Cristina Sestu, Antonio Majocchi and Alfredo D’Angelo

Adopting a quantitative explorative research design, we employed a sample of 770 foreign market entries in the period 2005–2015 to investigate whether particular entry mode

Abstract

Adopting a quantitative explorative research design, we employed a sample of 770 foreign market entries in the period 2005–2015 to investigate whether particular entry mode strategies such as joint venture or wholly owned subsidiary are differently chosen by small- and medium-sized enterprises (SMEs) and large firms. Various tests have been carried out revealing that SMEs show some different features compared to large firms when selecting their entry mode. SMEs react differently to economic downturns, and the diversification level is a crucial determinant for their entry choices while it is not for large firms. Moreover, we found for a set of other factors affecting the entry choice of large firms, not being significant for SMEs. Implications of these findings are discussed.

Details

Key Success Factors of SME Internationalisation: A Cross-Country Perspective
Type: Book
ISBN: 978-1-78754-277-8

Keywords

Content available
Article
Publication date: 21 November 2018

Shen Kunrong and Jin Gang

The purpose of this paper is to comprehensively examine the influence of formal and informal institutional differences on enterprise investment margin, mode and result.

Abstract

Purpose

The purpose of this paper is to comprehensively examine the influence of formal and informal institutional differences on enterprise investment margin, mode and result.

Design/methodology/approach

This paper is based on 2,440 micro samples of large-scale outbound investment from 609 Chinese enterprises from the years 2005 to 2016.

Findings

The study has found that formal institutional differences have little impact on investment scale, but significantly affect investment diversification. In order to avoid the management risks brought by formal institutional differences, enterprises tend to a full ownership structure. However, the choice between greenfield investment and cross-border mergers and acquisitions is not affected by formal institutional differences. In contrast, the impact of informal institutional differences is more extensive. Both formal and informal institutional differences significantly increase the probability of investment failure. Further research found that the Belt and Road Initiative (BRI) bridges the formal institutional differences.

Originality/value

The study concludes that developing the BRI, especially cultural exchanges with countries alongside the Belt and Road, will help enterprises to “go global” faster and better.

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Article
Publication date: 5 January 2015

Jorma Antero Larimo and Huu Le Nguyen

– The purpose of this paper is to analyse investment strategies and performance of Finnish firms in their international joint ventures (IJVs) established in Baltic States.

Abstract

Purpose

The purpose of this paper is to analyse investment strategies and performance of Finnish firms in their international joint ventures (IJVs) established in Baltic States.

Design/methodology/approach

The paper analyse performance of IJVs in Baltic States based on the IJV theory, international business literature, and foreign direct investments in Central and Eastern Europe (CEE) literature. The analysed factors include firm, investment, and inter-partner relationship-specific factors. To examine the propositions the paper used ten IJVs established by Finnish firms in various Baltic States between the period 1991 and 2005.

Findings

The results show that the level of uncertainties in the countries and the differences between partners are not related to firms’ commitments and the entry mode choice. Several Finnish firms preferred cost leadership to compete with other firms in the local markets. In most cases there was a positive relationship between the level of partners’ equity share, commitment to the IJV, and the level of trust between partners. The results indicated differences in the IJV performance depending on parent firms’ objectives, their competitive strategies, mode of entry, age of IJVs, control strategies, level of trust, and commitment between partners, as well as depending on the performance measures used.

Practical implications

This study suggests four observations that managers may need to take into consideration to improve IJV performance in the Baltic States. First, cost leadership strategy help to increase IJV performance in terms of sales. Second, social control mechanisms and narrow control leaded to better performance than formal and wide control. Third, minority ownership by Finnish firms in IJVs leaded to better performance based on sales, productivity and total performance whereas majority ownership had leaded to better performance in terms of total costs. Finally, the results confirmed that commitment to the IJV operation and trust on the other partner are very essential factors to IJV performance.

Originality/value

The study is the first one to analyse in more detail based on several cases the IJV strategies and performance of Finnish firms in the Baltic States. The analysed factors include several such factors which have not been analysed related to IJV operations in Baltic States (some also limitedly in the CEE context).

Details

Baltic Journal of Management, vol. 10 no. 1
Type: Research Article
ISSN: 1746-5265

Keywords

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