Characteristics of national cultures have frequently been claimed to influence the selection of entry modes. This article investigates this claim by developing a theoretical argument for why culture should influence the choice of entry. Two hypotheses are derived which relate culture to entry mode choice, one focusing on the cultural distance between countries, the other on attitudes towards uncertainty avoidance. Using a multinomial logit model and controlling for other effects, the hypotheses are tested by analysing data on 228 entries into the United States market by acquisition, wholly owned greenfield, and joint venture. Empirical support for the effect of national culture on entry choice is found.

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The Effect of National Culture on the Choice of Entry Mode

The formation of organizations that are international from inception—international new ventures—is an increasingly important phenomenon that is incongruent with traditionally expected characteristics of multinational enterprises A framework is presented that explains the phenomenon by integrating international business, entrepreneurship, and strategic management theory That framework describes four necessary and sufficient elements for the existence of international new ventures: (1) organizational formation through internalization of some transactions, (2) strong reliance on alternative governance structures to access resources, (3) establishment of foreign location advantages, and (4) control over unique resources

/pdf/toward-a-theory-of-international-new-ventures-3c7ptrb09r.pdf

Toward a theory of international new ventures

This paper compares the perspectives of transaction costs and strategic behavior in explaining the motivation to joint venture. In addition, a theory of joint ventures as an instrument of organizational learning is proposed and developed. Existing studies of joint ventures are examined in light of these theories. Data on the sectoral distribution and stability of joint ventures are presented.

https://www.jstor.org/stable/pdfplus/2486268.pdf

Joint ventures: Theoretical and empirical perspectives

World Investment Report

Firms are social communities that specialize in the creation and internal transfer of knowledge. The multinational corporation arises not out of the failure of markets for the buying and selling of knowledge, but out of its superior efficiency as an organizational vehicle by which to transfer this knowledge across borders. We test the claim that firms specialize in the internal transfer of tacit knowledge by empirically examining the decision to transfer the capability to manufacture new products to wholly owned subsidiaries or to other parties. The empirical results show that the less codifiable and the harder to teach is the technology, the more likely the transfer will be to wholly owned operations. This result implies that the choice of transfer mode is determined by the efficiency of the multinational corporation in transferring knowledge relative to other firms, not relative to an abstract market transaction. The notion of the firm as specializing in the transfer and recombination of knowledge is the foundation to an evolutionary theory of the multinational corporation

/pdf/knowledge-of-the-firm-and-the-evolutionary-theory-of-the-1tiiwlm1vu.pdf

Knowledge of the Firm and the Evolutionary Theory of the Multinational Corporation

Taxation and mining: Nonfuel minerals in Bolivia and other countries

Some authorities in international business have suggested that international markets are becoming increasingly homogeneous, causing more firms to offer global products. Vachani and Wells based on a study of the product decisions of Indian subsidiaries of five multinationals argue that there remain important consumer segments that have special needs which are not met by global products. According to Vachani and Wells, decisions of multinationals and local firms to cater to the special needs of various consumer segments in developing countries depend on four variables: the structure and competitive conditions of their industry segments, the ability to use their traditional competitive advantage in different segments, the ease with which their usual product lines can be extended into new segments, and the availability of more special products elsewhere within the multinational enterprise.

/pdf/how-far-should-global-products-go-b8852yanr1.pdf

How Far Should Global Products Go

In the past decade, a number of Third World countries have emerged from their economic status as sources of raw materials or as sweatshops in which low-wage, low-skilled workers produced goods for the richer nations. Now they are themselves manufacturing and consuming high-quality, high-technology products and are establishing foreign subsidiaries, most often in other developing countries. This book is the first to study the significant-growth in foreign direct investment by such countries and its impact on the international economic order. Third World Multinationals explores the question of why firms based in developing countries have chosen to invest in branches, joint ventures, and wholly-owned subsidiaries overseas rather than simply export goods or enter into licensing arrangements abroad. In addition to the cost of transport, tariff barriers, and import restrictions, it identifies a number of less apparent factors, such as the motivations of managers in wanting to go abroad, the meshing of technological levels, ethnic ties, and the desire to protect proprietary processes and competitive advantages. The book compares the similarities and differences between these firms and their more established counterparts from the industrialized countries, both large and small. It examines the implications of these developments on the relations between specific home and host countries, and on North-South relations and South-South relations in general. In the face of scarce and unreliable figures, the author has compiled a considerable amount of validated data and viable estimates from numerous world sources. The cases and examples are taken mainly from South America and South and Southeast Asia, those regions that have put forth the largest number of multinational offshoots.

Third World Multinationals: The Rise of Foreign Investment from Developing Countries.

Developing countries around the world are liberalizing their trade and investment regimes. This paper, based on a multiyear, multicountry study, assesses the likely impact of these new trade and investment policies on foreign investment projects. It points to the divergence between rhetoric and reality that often characterizes the new investment policies and institutions. Indeed, the study suggests that, for many foreign investors, changes in trade policy are likely to be more significant than changes in investment policy. The paper provides recommendations to investors on how to take advantage of the new policies they are likely to encounter in developing countries. © 1993 John Wiley & Sons, Inc.

Louis T. Wells

Papers

Taxation and mining: Nonfuel minerals in Bolivia and other countries

How Far Should Global Products Go

Third World Multinationals: The Rise of Foreign Investment from Developing Countries.

Don't stop with the one‐stop shop: Foreign investment in a liberalizing third world

Cutting Red Tape: Lessons from a Case-based Approach to Improving the Investment Climate in Mozambique