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Book part
Publication date: 23 November 2017

Desislava Dikova, Ahmad Arslan and Jorma Larimo

We investigate the effect of distance – political, economic, cultural and spatial, on developed-economy multinational enterprises’ (MNEs’) ownership decisions in cross-border (CB…

Abstract

We investigate the effect of distance – political, economic, cultural and spatial, on developed-economy multinational enterprises’ (MNEs’) ownership decisions in cross-border (CB) acquisitions. We start with the premise that distance discourages full and majority ownership in CB acquisitions, and further investigate the moderating role of distance-reducing factors. We examine how the relationship between distance and acquisition ownership decision is moderated by firm-specific characteristics, such as firm size, general international experience, and specific host country experience. Our data sample consists of 1,041 CB acquisitions under taken by Finnish MNEs in 58 countries during the time period 1990–2010. We find substantial support for all our hypotheses and conclude that the negative effects of distance on CB acquisition equity stake are positively moderated by the three firm-specific resources but their individual importance is conditional on the host country type (developed or emerging).

Details

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

Keywords

Article
Publication date: 19 May 2023

Jingyu Jia and Ping Wu

State-owned firms play important roles in Chinese cross-border acquisition (CBA) activities. However, compared with private firms, state-owned firms have a lower likelihood of…

Abstract

Purpose

State-owned firms play important roles in Chinese cross-border acquisition (CBA) activities. However, compared with private firms, state-owned firms have a lower likelihood of acquisition completion and take longer to complete a deal. This paper aims to determine why this phenomenon exists and how state-owned firms can overcome the constraints of their identity.

Design/methodology/approach

By integrating organizational learning theory with institutional theory, this paper attempts to answer the research questions from a legitimacy perspective. Employing Chinese CBA data from 1982 to 2014, the authors use a logit model and a random effects model to test the hypothesis.

Findings

The results show that a state-owned identity easily causes legitimacy concerns among host country regulatory agencies; thus, it may result in longer and more uncertain evaluation behaviors, which lead to a lower likelihood of CBA completion and a longer deal duration. Only experience with failed acquisitions can increase CBA completion probability. Furthermore, in very complex decision-making environments, such as that surrounding deal duration, only specific types of experience (i.e. experience of failed international acquisitions) can trigger learning behavior, whereas general experience (i.e. failed acquisition experience) has little influence. Favorable bilateral relationships may not improve the completion rate and efficiency of state-owned firms, but high-quality host country institutions lead to a higher likelihood of CBA completion among state-owned firms; however, this may be not conducive to decreasing the time needed to complete an acquisition deal.

Originality/value

First, by discussing the completion rate and duration of CBAs conducted by state-owned firms and analyzing the factors that influence them, this paper enriches and develops the theory of organizational overseas mergers and acquisitions (M&As). Second, by adopting a legitimacy perspective and integrating institutional theory, the authors theorize how state-owned status influences firms’ M&A completion rate and time and test the hypotheses empirically; thus, this paper improves and deepens institutional theory. Third, by discussing how different types of experience (i.e. successful experience vs failed acquisition experience) influence the acquisition completion rate and duration and how general experience and specific types of experience affect these two dependent variables differently, this paper explains how state-owned firms can learn effectively from experience, contributing to organizational learning theory.

Article
Publication date: 1 March 2022

Abrahim Soleimani and K. Michelle Yang

Drawing on the institutional theory and organizational learning literature, the purpose of this study is to investigate the relationship between prior acquisition experience and…

Abstract

Purpose

Drawing on the institutional theory and organizational learning literature, the purpose of this study is to investigate the relationship between prior acquisition experience and the duration of the deal completion stage in cross-border acquisitions and the impacts of the quality of business institutions in the host country and the institutional distance between home and host countries on this relationship.

Design/methodology/approach

This study uses the sixth wave of mergers and acquisitions, the first truly global wave that covered a wide range of institutional settings, to test the hypotheses. Using a panel data regression method, it analyzes 8,175 cross-border acquisitions from 2003 to 2009, conducted by acquirers from 47 advanced and emerging economies in 56 advanced and emerging economies.

Findings

This study finds that host-country acquisition experience has more impact on shortening deal completion duration. Home-country acquisition experience is more effective in host countries with less developed business institutions than in those with more developed ones. The results of this study show that the quality of business institutions in the host country and the institutional distance between the home and host countries amplify or attenuate the effect of past acquisition experiences, depending on their origin and the quality of business institutions and institutional distance of where they are used.

Originality/value

The growing popularity of cross-border acquisitions among emerging country acquirers calls for a systemic study of the cross-border acquisition process. One of the critical and less understood stages in this process is the deal completion stage. This study examines how the institutional environments in the home and host countries impact the effectiveness of past acquisition experiences on shortening this stage.

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 in the…

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

Keywords

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 entering a…

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

Keywords

Article
Publication date: 22 February 2024

Agnieszka Nowinska and Marte C.W. Solheim

The purposes of this paper are to delve into the “liability of foreignness” among immigrants and to explore factors that may enhance or moderate such liability while obtaining…

Abstract

Purpose

The purposes of this paper are to delve into the “liability of foreignness” among immigrants and to explore factors that may enhance or moderate such liability while obtaining jobs in host countries. We explore the competition for jobs in a host country among foreign-born individuals from various backgrounds and local residents, by examining such factors as their human capital, as well as, for the foreign-born, their duration of residence in the host country.

Design/methodology/approach

Applying configurational theorizing, we propose that the presence of specific human capital can help reduce the challenges associated with the “liability of foreignness” for migrants who have shorter durations of stay in the host country, and, to a lesser extent, for female migrants. Our study draws upon extensive career data spanning several decades and involving 249 employees within a Danish multinational enterprise.

Findings

We find that specific human capital helps established immigrants in general, although female immigrants are more vulnerable. We furthermore find a strong “gender liability” in the industry even for local females, including returnees in the host countries. Our findings suggest that for immigrants, including returnees, career building requires a mix of right human capital and tenure in the host country, and that career building is especially challenging for female immigrants.

Originality/value

While the concept of “liability of foreignness” – focussing on discrimination faced by immigrants in the labour market – has been brought to the fore, a notable gap exists in empirical research pertaining to studies aiming at disentangling potential means to overcome such liability, as well as in studies seeking to explore this issue from a stance of gendered experience.

Details

Journal of Global Mobility: The Home of Expatriate Management Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2049-8799

Keywords

Book part
Publication date: 23 November 2017

Yi Wang and Jorma Larimo

In this study, we analyze the general effect of acquirers’ ownership strategy on the survival in foreign acquisitions. Furthermore, we attempt to address five potential moderating…

Abstract

In this study, we analyze the general effect of acquirers’ ownership strategy on the survival in foreign acquisitions. Furthermore, we attempt to address five potential moderating effects: international, regional, target country experience, cultural distance, as well as host country development. The developed hypotheses are tested on a sample of 1,345 acquisitions made by 174 Finnish firms in 59 countries during 1980–2005. The results indicate that in general WOS increases the probability of survival of foreign acquired units. We further find that the impact of WOS on the survival of foreign acquired units is contingent upon cultural distance and host country development but not on the experience of buying firms.

Details

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

Keywords

Article
Publication date: 5 July 2023

Meredith Downes and Alex J. Barelka

This paper examines the relationship between chief executive officer (CEO) international experience (IE) and firm performance. The authors also examine the symmetry of this…

Abstract

Purpose

This paper examines the relationship between chief executive officer (CEO) international experience (IE) and firm performance. The authors also examine the symmetry of this relationship, whereby home and host countries would be interchangeable without any significant change in the impact of each cultural dimension on firm performance.

Design/methodology/approach

For a sample of CEOs from Fortune's list of Global 500 companies, firm performance was measured as average net margin for the first four years of CEO tenure. IE was the difference between home country culture and that where CEO experience was gained, based on the GLOBE cultural dimensions. Regression then tested the IE/firm performance relationship. For symmetry, distance direction was coded as either positive or negative, depending on whether home country score on a given dimension was higher or lower than that of the host. Moderator regression then tested for whether distance direction impacted the relationship between IE and firm performance.

Findings

Results show that overall distance between home and host cultures in aggregate does not have a significant effect on firm performance. However, for specific dimensions, greater distances between the CEO's countries of experience and that of the parent company on in-group collectiveness and performance orientation are associated with higher firm performance, and greater distances on power distance and assertiveness are associated with lower performance. The authors further find asymmetric patterns in the IE–performance relationship, attributable primarily to the fact that, when scores on performance orientation are greater for the home than host country, organizational performance is significantly enhanced.

Originality/value

This study's hypotheses are grounded in theory, combining the human capital perspective with cultural paradox theory. In addition, the authors offer a unique approach for measuring the dimensional distance of culture.

Details

Journal of Global Mobility: The Home of Expatriate Management Research, vol. 11 no. 4
Type: Research Article
ISSN: 2049-8799

Keywords

Article
Publication date: 13 June 2023

Mary Kay Kay Rickard, Doreen Sams and Jeniffer Sams

The purpose of this study is to extend the Blevins et al. (2020) study by empirically examining the benefits of using a customized study abroad host-country provider (hereafter…

Abstract

Purpose

The purpose of this study is to extend the Blevins et al. (2020) study by empirically examining the benefits of using a customized study abroad host-country provider (hereafter referred to as “SAA”) of logistical and other services that support non-native host country (hereafter referred to as non-indigenous) college of business study abroad educators. This study also makes a significant contribution by extending Strange and Gibson’s (2017) call by examining transformative learning experiences (TLEs), a high-impact practice, from educators’ and students’ perspectives of two types of study abroad experiences (i.e. one with and one without an SAA).

Design/methodology/approach

A mixed methods and multiple perspectives triangulation of the three studies (i.e. student survey, student-produced artifacts data and faculty interviews conducted in Canada, Spain and the UK) was used for this study to increase confidence in the findings by providing a comprehensive picture of the results. A mixed methodology provides rich, in-depth data for analysis as to how study abroad experience [hereafter referred to as experience(s) abroad] benefits from contracting with an SAA to work with a non-indigenous business course educator.

Findings

This study's findings demonstrate the positive impact of transformative learning from a short-term study abroad experience from contracting with an SAA.

Practical implications

Benefits of contracting with a host-country SAA are increased time and a reduction in the emotional toll on educators. Educators are free to provide memorable international business educational experiences abroad, resulting in student satisfaction and transformative learning.

Originality/value

The originality of this study is the mixed methods and multiple perspectives approach to the topic.

Details

Journal of International Education in Business, vol. 16 no. 3
Type: Research Article
ISSN: 2046-469X

Keywords

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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