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1 – 10 of over 3000A multinational firm’s expansion in a foreign market is a key issue of international business. The purpose of this study is to extend the understanding of essential drivers that…
Abstract
Purpose
A multinational firm’s expansion in a foreign market is a key issue of international business. The purpose of this study is to extend the understanding of essential drivers that will facilitate firm’s assessment of alternative modes of sequential expansion.
Design/methodology/approach
The study applies the knowledge-based view and explores a multinational firm’s sequential post-entry expansion in a foreign market. Event histories of Swedish industrial firms’ establishments of wholly owned subsidiaries in Germany, the UK and the USA were explored using Cox regression.
Findings
Broad market experiences stemming from corporate strategy and deep experiences from the preceding subsidiary increase the likelihood of a sequential investment. Effects of broad experiences are contingent on the context specified by the geographic scope of the firm and its general subsidiary experience.
Research limitations/implications
The study contributes to international expansion theory and integrates sources of knowledge originating from strategy theory and internationalization theory. The study shows that the dual approach is needed to understand international expansion.
Practical implications
In evaluating a further subsidiary investment in a foreign market, the multinational firm is advised to assess whether it possesses enough market experiences to justify the investment. The experiences should be associated with corporate strategy, the previous wholly owned subsidiary and the context specifications identified in the study.
Originality/value
The study is unique, as it addresses the simultaneous impact of broad and deep market experiences. Also, the inclusion of central context specifications makes the study novel.
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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.
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Yu‐Ching Chiao, Fang‐Yi Lo and Chow‐Ming Yu
The purpose of this paper is to examine the impact that three sets of variables – derived from transaction cost theory (TCT), the resource‐based view (RBV), and institutional…
Abstract
Purpose
The purpose of this paper is to examine the impact that three sets of variables – derived from transaction cost theory (TCT), the resource‐based view (RBV), and institutional environment – have on choice of entry strategies of multinational corporations (MNCs) from an emerging market.
Design/methodology/approach
The sample consisted of 819 Taiwanese firms which were investigated using a national survey, and logistic regression analysis was used for testing the hypotheses.
Findings
The empirical findings confirm that the following factors affect this decision: firm‐specific assets, international experience, whether a firm is investing abroad in pursuit of a particular customer, whether a firm seeks complementary assets abroad, and the perceived institutional differences (PEDs) between a firm's home country and the host country. The findings also suggest that PEDs have a moderating effect on foreign market entry.
Research limitations/implications
As MNCs from emerging markets make the decision of entry mode strategies, they must carefully consider not only the related variables in terms of TCT and the RBV, but also the influence of institutional factors in host countries.
Originality/value
This paper explores the modes of entry chosen by Taiwanese firms investing in China on the basis of TCT, institutional environment, and the RBV.
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Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some…
Abstract
Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.
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Anders Pehrsson and Tobias Pehrsson
The purpose is to extend the understanding of the resource base of the industrial firm's greenfield expansion on a foreign country market once a wholly owned subsidiary has been…
Abstract
Purpose
The purpose is to extend the understanding of the resource base of the industrial firm's greenfield expansion on a foreign country market once a wholly owned subsidiary has been established.
Design/methodology/approach
A conceptual framework is developed relying on the resource-based theory of strategy. Resource bases in terms of value-adding activities of four Swedish industrial firms' subsidiaries in the USA are analysed. Four theoretical propositions are formulated regarding consistent associations among the activities and contingencies that are relevant to expansion on a foreign country market.
Findings
The propositions show how foreign subsidiaries' value-adding activities are aligned with two contingencies: the corporate strategy manifested by the product/market knowledge transferred from the parent firm that enable local expansion and the subsidiary's knowledge of competition barriers that obstruct local expansion. The value-adding activity may be basic or advanced and may repeat the parent firm's activity.
Research limitations/implications
US subsidiaries of four Swedish industrial firms were analysed. The propositions may be turned into hypotheses suitable for tests in statistical studies. A test may include firms from different home countries and subsidiaries on different host country markets.
Practical implications
The conceptual framework and the propositions provide a ground for an industrial firm's decision to conduct a strategy of greenfield expansion on a foreign country market once a wholly owned subsidiary has been established.
Originality/value
The framework is unique and emphasizes that both knowledge stemming from corporate strategy and knowledge of local competition need to be acknowledged in order to understand firm's greenfield expansion on a foreign country market.
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Taewoo Roh, Dong-Sung Cho, Hwy-Chang Moon and Yun-Cheol Lee
– The aim of this study is to examine the entry mode that retail firms correctly choose when culture is simultaneously considered has a positive effect on firm performance.
Abstract
Purpose
The aim of this study is to examine the entry mode that retail firms correctly choose when culture is simultaneously considered has a positive effect on firm performance.
Design/methodology/approach
This study relies on the two-step analysis originally derived from Heckman and applied into multinational enterprises (MNEs) entry mode by Shaver. To figure out the probability of entry mode in the first step, the paper uses the logit regression that independent variable is four culture dimensions and dependent variable is the entry mode (joint venture vs wholly owned subsidiary). Since the selection bias is relatively reduced by adding lambda calculated in the first step to the second step that verifies the degree of fit, the safety for interpretation of subsequent models is secured.
Findings
This study collected 96 entries of top global retail firms and found out the relationship between culturally determined entry mode and firm performance is positively significant. While existing literatures dealing with manufacturing firms' international entries showed that wholly owned subsidiary is favored over joint venture when the cultural distance is high, this study focusing on retail firms in the service sector indicates that those firms are more likely to enter the global market with joint venture. Finally, firms that appropriately understand cultural distance demonstrated higher performance in the target country.
Originality/value
This study focuses on the relationship between culturally determined entry mode and firm performance in the service sector, whereas extant literatures heavily depend on the one in the manufacturing sector. Moreover, the two-step analysis is exquisitely adopted to confirm the hypotheses.
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There is a lack of research on how the industrial firm's international strategy is associated with basic and advanced value-adding modes of the wholly owned foreign subsidiary…
Abstract
Purpose
There is a lack of research on how the industrial firm's international strategy is associated with basic and advanced value-adding modes of the wholly owned foreign subsidiary. The purpose of this paper is to fill the gap by answering two questions: how are relatedness between the firm and the foreign subsidiary, and the firm's international scope associated with foreign subsidiary's value-adding mode? How does the subsidiary's market experience moderate the relationships?
Design/methodology/approach
The study develops a conceptual model that integrates strategy theory and internationalization theory in order to explain basic value-adding modes (promotion, sales, and after-sales services), and advanced modes that also include product development and/or production. Also, the study tests the model using statistical data from subsidiaries of Swedish firms operating in Germany, the USA, and the UK.
Findings
It was found that greater relatedness between the core business unit of the parent firm and the foreign subsidiary favors a basic mode. However, the foreign subsidiary's market experience weakens the relationship, and the interaction triggers an advanced mode. Also, greater international scope of the firm favors an advanced mode.
Research limitations/implications
The model test shows that research needs to consider both international strategy and market experience in explaining value-adding modes of an industrial firm's wholly owned subsidiary.
Practical implications
By using the study contributions the industrial firm's efforts to efficiently implement international strategy would become more efficient as strategy coherence will increase.
Originality/value
This paper contributes to literature on international strategy and internationalization by showing that international strategy and market experience of foreign markets mutually impact value-adding modes of wholly owned foreign subsidiaries.
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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 variable…
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.
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Yim‐Yu Wong, Thomas E. Maher and Sherriff T.K. Luk
The seconf of two articles on the transfer from foreign companies to affiliates in China. Addresses wholly owned subsidiaries. Tries to determine strategic management know‐how and…
Abstract
The seconf of two articles on the transfer from foreign companies to affiliates in China. Addresses wholly owned subsidiaries. Tries to determine strategic management know‐how and if it is currently being transferred. Attempts to forecast the likelihood of access to China’s domestic market and if this will grow.
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The study of international business has become increasinglyimportant in recent years. So important that the American Assembly ofthe Collegiate Schools of Business (AACSB) has…
Abstract
The study of international business has become increasingly important in recent years. So important that the American Assembly of the Collegiate Schools of Business (AACSB) has called for the internationalisation of business curricula. In 1992 and beyond, successful business people will treat the entire world as their domain. No one country can operate in an economic vacuum. Any economic measures taken by one country can affect the global economy. This book is designed to challenge the reader to develop a global perspective of international business. Globalisation is by no means a new concept, but there are many new factors that have contributed to its recently accelerated growth. Among them, the new technologies in communication and transport that have resulted in major expansions of international trade and investment. In the future, the world market will become predominant. There are bound to be big changes in the world economy. For instance the changes in Eastern Europe and the European Community during the 1990s. With a strong knowledge base in international business, future managers will be better prepared for the new world market. This book introduces its readers to the exciting and rewarding field of international management and international corporations. It is written in contemporary, easy‐to‐understand language, avoiding abstract terminology; and is organised into five sections, each of which includes a number of chapters that cover a subject involving activities that cross national boundaries.
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