Showing papers in "Journal of International Business Studies in 2009"
TL;DR: The Uppsala internationalization process model was revisited in the light of changes in business practices and theoretical advances that have been made since 1977 as mentioned in this paper, and the change mechanisms in the revised model are essentially the same as those in the original version, although they add trust-building and knowledge creation, the latter to recognize the fact that new knowledge is developed in relationships.
Abstract: The Uppsala internationalization process model is revisited in the light of changes in business practices and theoretical advances that have been made since 1977. Now the business environment is viewed as a web of relationships, a network, rather than as a neoclassical market with many independent suppliers and customers. Outsidership, in relation to the relevant network, more than psychic distance, is the root of uncertainty. The change mechanisms in the revised model are essentially the same as those in the original version, although we add trust-building and knowledge creation, the latter to recognize the fact that new knowledge is developed in relationships.
3,700 citations
TL;DR: In this paper, the authors empirically study determinants of decision by companies to offshore innovation activities and conclude that the emerging shortage of highly skilled science and engineering talent in the US and the need to access qualified personnel are important explanatory factors for offshoring innovation decisions.
Abstract: This paper empirically studies determinants of decision by companies to offshore innovation activities. It uses survey data from the international Offshoring Research Network project to estimate the impact of managerial intentionality, past experience, and environmental factors on the probability of offshoring innovation projects. The results show that the emerging shortage of highly skilled science and engineering talent in the US and, more generally, the need to access qualified personnel are important explanatory factors for offshoring innovation decisions. Moreover, contrary to drivers of many other functions, labor arbitrage is less important than other forms of cost savings. The paper concludes with a discussion of the changing dynamics underlying offshoring of innovation activities, suggesting that companies are entering a global race for talent.
765 citations
TL;DR: The authors applied competitive dynamics theory to analyze these contextual moderators of spillovers, and test hypotheses derived in a meta-analysis of the empirical literature on spillovers and found that spillovers vary across countries at different levels of economic development.
Abstract: Local firms may attract productivity spillovers from foreign investors, yet these vary with local firms' awareness, capability and motivation to react to foreign entry. In consequence, spillovers vary across countries at different levels of economic development. We apply competitive dynamics theory to analyze these contextual moderators of spillovers, and test hypotheses thus derived in a meta-analysis of the empirical literature on spillovers. Our analysis suggests a curvilinear relationship between spillovers and the host country's level of development in terms of income, institutional framework and human capital.
653 citations
TL;DR: In this article, the authors consider the transactional characteristics of complementary local assets and model foreign market entry as the optimal assignment of equity between their owners and MNEs, and predict whether equity will be held by MNE or by local firms, or shared between them.
Abstract: Both Anderson and Gatignon and the Uppsala internationalization model see the initial mode of foreign market entry and subsequent modes of operation as unilaterally determined by multinational enterprises (MNEs) arbitraging control and risk and increasing their commitment as they gain experience in the target market. OLI and internalization models do recognize that foreign market entry requires the bundling of MNE and complementary local assets, which they call location or country-specific advantages, but implicitly assume that those assets are freely accessible to MNEs. In contrast to both of these MNE-centric views, I explicitly consider the transactional characteristics of complementary local assets and model foreign market entry as the optimal assignment of equity between their owners and MNEs. By looking at the relative efficiency of the different markets in which MNE and complementary local assets are traded, and at how these two categories of assets match, I am able to predict whether equity will be held by MNEs or by local firms, or shared between them, and whether MNEs will enter through greenfields, brownfields, or acquisitions. The bundling model I propose has interesting implications for the evolution of the MNE footprint in host countries, and for the reasons behind the emergence of Dragon MNEs.
517 citations
TL;DR: In this article, the authors examined factors affecting the export orientation and export performance of high-technology SMEs in an emerging economy, using a unique, hand-collected dataset of 711 SMEs from Zhongguancun Science Park.
Abstract: Combining international business research with the knowledge-based view, this paper examines factors affecting the export orientation and export performance of high-technology Small and medium enterprises (SMEs) in an emerging economy. Using a unique, hand-collected dataset of 711 SMEs from Zhongguancun Science Park in China, it argues that export orientation and performance depend not only on the development of capabilities through R&D and technology transfer, but also on entrepreneurial characteristics, such as the founder's international background and global networks. It is also shown that both export orientation and performance are positively associated with the presence of a “returnee” entrepreneur.
491 citations
TL;DR: The Future of the Multinational Enterprise (FME) as mentioned in this paper is a seminal work in the field of international business research, focusing on the Coasian nature of the firm and on rational action modelling.
Abstract: This paper reviews the progress of the research agenda initiated by The Future of the Multinational Enterprise (1976). Focusing initially on the problem of explaining the existence of the multinational enterprise, the agenda soon broadened to encompass the analysis of alternative modes of foreign market entry, the role of international joint ventures, the impact of innovation on corporate growth, and the role of culture in international business. The core philosophy – based on the Coasian nature of the firm and on rational action modelling – has remained constant, while the widening range of applications has encouraged synthesis with theories developed in other fields of research. Success in answering any one question invariably generates new questions, which must in turn be answered through a further extension of the theory, and this dynamic continues to drive the development of the theory today. Internalisation theory has retained its validity and its vitality over the past 30 years, and is currently being extended into new fields of international business research.
431 citations
TL;DR: In this paper, the authors examined 433 mergers and acquisitions announcements associated with 58 emerging-market multinationals during the sample period 1991-2004 and found that cross-border expansions of EMMs through acquisitions do not create value, but point to value destruction for more than half of the transactions analyzed.
Abstract: The primary objective of this study is to examine the value implications of cross-border acquisitions of emerging-market multinationals (EMMs). We examine 433 mergers and acquisitions announcements associated with 58 EMMs during the sample period 1991–2004. The mergers and acquisitions announcements data come from the Thomson SDC Platinum database. We employ event study methodology to explore the impact of the announcements on the value of acquiring firms. The results show that, on average, cross-border expansions of EMMs through acquisitions do not create value, but point to value destruction for more than half of the transactions analyzed. To explore the factors influencing the direction and magnitude of market reaction, we analyze a cross-sectional sample of firms. While we find that target size, ownership structure of the target (private vs public), and structure of the bidder (diversified vs non-diversified) positively affect the bidder value, high-tech nature of the bidder and pursuit of targets in related industries negatively affect the bidder value. Our empirical findings provide some support for the positive impact of the stake pursued in the target firm and cultural distance, but not for the international experience and enhanced corporate governance.
429 citations
TL;DR: This paper found that affect-and cognition-based trust were more intertwined for Chinese than for American managers, whereas the effect of friendship was more positive for Americans than for Chinese, and the extent to which a given relationship was highly embedded in ties to third parties increased cognition based trust for Chinese but not for Americans.
Abstract: This research investigates hypotheses about differences between Chinese and American managers in the configuration of trusting relationships within their professional networks. Consistent with hypotheses about Chinese familial collectivism, an egocentric network survey found that affect- and cognition-based trust were more intertwined for Chinese than for American managers. In addition, the effect of economic exchange on affect-based trust was more positive for Chinese than for Americans, whereas the effect of friendship was more positive for Americans than for Chinese. Finally, the extent to which a given relationship was highly embedded in ties to third parties increased cognition-based trust for Chinese but not for Americans. Implications for cultural research and international business practices are discussed.
388 citations
TL;DR: In this article, a survey study of a most challenging emerging-market sector, namely Korean hightechnology businesses, argues three major points: (1) Relationships of community and connection will be more common in family businesses than in non-FBs.
Abstract: Family businesses (FBs) are said to treat their employees with unusual consideration to form a cohesive internal ‘‘community’’. They are also claimed to develop deeper, more extensive ‘‘connections’’ or relationships with outside stakeholders. Both behaviors may increase the viability of a business intended to support an owning family and its later generations. Such social linkages, we believe, may compensate for the lack of capital, product and labor institutional infrastructures in dynamic emerging economies. This survey study of a most challenging emerging-market sector, namely Korean hightechnology businesses, argues three major points. (1) Relationships of community and connection will be more common in FBs than in non-FBs. (2) These relationships will enhance performance in emerging-market hightechnology sectors, which, because of their competitive, complex, and everchanging nature, rely on significant expert knowledge and social capital within and outside the organizational community. (3) The performance of FBs will benefit more from these community and connection relationships than the performance of non-FBs, because in these personally intimate settings employees and external partners will be especially likely to return the generosity of a visibly active owning family, or to penalize its selfishness. Significant empirical support was found for most of these hypotheses.
381 citations
TL;DR: In this article, the authors investigate the widespread internationalization of SMEs, and specific factors that support their superior performance abroad, uncovering a collection of intangible capabilities that are especially salient to these firms and their growing international involvement and identifying international business competence as an intangible, overarching firm resource that engenders superior international performance in the international SME through case studies and a comprehensive literature review.
Abstract: The trend of increasing internationalization of small and medium enterprises (SMEs) is noteworthy, because such firms typically have far fewer financial and tangible resources than large multinational enterprises As a result, international business is often more challenging for smaller firms In this study we investigate the widespread internationalization of SMEs, and specific factors that support their superior performance abroad We uncover a collection of intangible capabilities that are especially salient to these firms and their growing international involvement We identify international business competence (IBC) as an intangible, overarching firm resource that engenders superior international performance in the international SME Through case studies and a comprehensive literature review, we identify four dimensions of IBC We devise and assess a model that links IBC to SME international performance Results suggest that international orientation, international marketing skills, international innovativeness, and international market orientation are all significant dimensions of IBC, and that IBC is instrumental in SME international performance We discuss resultant findings and offer managerial implications
372 citations
TL;DR: In this article, social interaction between managers from different units of a multinational enterprise (MNE) has been shown to be an important factor stimulating intra-MNE knowledge-sharing.
Abstract: Social interaction between managers from different units of a multinational enterprise (MNE) has been shown to be an important factor stimulating intra-MNE knowledge-sharing. Face-to-face social interactions form a communication channel particularly conducive to the transfer of tacit, non-codified knowledge. But intensive social interaction also provides opportunities for social construction of knowledge in a learning dialogue. The first explanation (sender–receiver) makes us expect social interaction to moderate positively the effects of the factors giving rise to knowledge flows in the first place, such as differences in capabilities between MNE subsidiaries. The second perspective (social learning) also grants an independent effect to social interaction as a main factor stimulating intra-MNE knowledge flows. We formulate hypotheses based on both perspectives, and test these on data from 169 MNE subsidiaries. Our findings show a considerable main effect of social interaction on all intra-MNE knowledge flows, confirming the expectations based on the social learning model. Interaction effects, based on the predictions of the sender–receiver model, are only partly confirmed. These findings suggest that future research should devote more attention to the social constitution of MNE knowledge.
TL;DR: In this article, a double-edged sword effect of cultural differences on international acquisition performance is investigated, where cultural distance impedes understandability of key capabilities and constrains communication between acquirers and their acquired units, bringing about a negative indirect effect on acquisition performance.
Abstract: This study aims to bring together seemingly contradicting arguments in the literature about the role of cultural distance in international acquisitions. We offer a model that postulates that cultural distance relates negatively to international acquisition performance because it taxes integration capabilities during international acquisitions, but that cultural distance also elevates the positive association of integration capabilities and international acquisition performance because it provides more learning opportunities that can only be exploited with strong integration capabilities. Empirical tests with a sample of international acquisitions by 118 US multinational companies provide support for the proposed model. On one hand, we find that cultural distance impedes understandability of key capabilities that need to be transferred, and constrains communication between acquirers and their acquired units, bringing about a negative indirect effect on acquisition performance. On the other hand, we find that cultural distance enriches acquisitions by enhancing the positive effects of understandability and communication on acquisition performance. Acquirers that can overcome the impeding effects of cultural distance on understanding key capabilities and effective communication appear to reap significant performance gains. Our study provides initial support for a double-edged sword effect of cultural differences on acquisition performance, and illustrates the importance of integration capabilities.
TL;DR: In the early development of the international business field, the focus of attention moved from the country level to the firm level, and interest in location issues declined as discussed by the authors, however, more recently, firm-based research has itself become increasingly concerned with the study of firm-location interactions.
Abstract: In the early development of the international business field, the focus of attention moved from the country level to the firm level, and interest in location issues declined. More recently, firm-based research has itself become increasingly concerned with the study of firm–location interactions. When examining two-way knowledge flows or spillovers between multinational enterprises (MNEs) and other actors in specific locations, the diversity or heterogeneity of firms matters, as does the diversity of locational environments. The localization of knowledge sources depends on MNE group-level strategies for growth and organizational decentralization, on subsidiary-level evolution towards local competence-creating efforts, and on the development of suitable business networks within locations. MNEs now have a greater potential to benefit from a synergistic locational portfolio of complementary sources of knowledge. The locational composition of the international network for knowledge sourcing of a given MNE depends upon the extent of institutional compatibility between the locations in which the MNE is active. This compatibility between locations in turn affects the capacity of the MNE to become an insider in local business systems, and to influence the local institutional environment.
TL;DR: This paper found that cross-border acquisitions perform better in the long run if the acquirer and the target come from countries that are culturally more disparate than the USA and Canada, and also showed that there is some evidence of synergies when acquirers are from stronger economies relative to the targets.
Abstract: Using a sample of over 800 cross-border acquisitions during 1991–2004, we find that, contrary to general perception, cross-border acquisitions perform better in the long run if the acquirer and the target come from countries that are culturally more disparate. We use mainly the Hofstede measure of cultural dimensions to measure cultural distance, but also examine alternative proxies. The positive relationship of performance to cultural distance persists after controlling for several deal-specific variables and country-level fixed effects, and is robust to alternative specifications of long-term performance. Cash and friendly acquisitions tend to perform better in the long run. There is also some evidence of synergies when acquirers are from stronger economies relative to the targets.
TL;DR: In this article, the authors developed a comprehensive model integrating performance-enhancing mechanisms and antecedent processes of trust in import-export relationships and found that existing levels of trust have a positive effect on relationship performance outcomes achieved 1 year later.
Abstract: Trust is a central construct in relationship marketing. Yet the literature provides mixed empirical evidence on the trust–performance linkage. Also, there is limited research on how to build trusting international buyer–seller relations. We develop a comprehensive model integrating performance-enhancing mechanisms and antecedent processes of trust in import–export relationships. Our survey results from importers trading with overseas manufacturers suggest that existing levels of trust have a positive effect on relationship performance outcomes achieved 1 year later. Importantly, trust takes on greater importance in enhancing performance under conditions of high interdependence, whereas in circumstances of low interdependence trust has no discernible effect. The findings also indicate that interfirm psychic distance, internal uncertainty, and exporter transaction-specific assets and opportunism are related to importer trust. Implications for academics and practitioners are addressed.
TL;DR: In this article, the authors provided empirical evidence about born-global firms in the software industry of Costa Rica, a small developing country with an open economy, based on data collected through interviews with CEOs or founders of 40 Costa Rican software companies.
Abstract: This paper provides empirical evidence about born-global firms in the software industry of a small developing country with an open economy: Costa Rica. The paper is based on data collected through interviews with CEOs or founders of 40 Costa Rican software companies. Findings show that there are few born-global firms among Costa Rican software providers. We find that most companies followed a gradual approach to internationalization, and they did not export immediately upon birth. A careful analysis of firms that exported soon after they were born reveals that most firms are actually “born regional.”
TL;DR: In this article, the authors developed a conceptualization of marketing dynamic capabilities (MDCs), investigated their development in international joint ventures (IJVs), and explored their effect on IJVs' performance and competitive advantage.
Abstract: The influence of firms' dynamic capabilities on performance has been well articulated in the strategy literature. Yet conceptualization and operationalization of dynamic capabilities in marketing function have not been attempted, and empirical evidence substantiating the effect of dynamic capabilities is scarce. This research develops a conceptualization of marketing dynamic capabilities (MDCs), investigates their development in international joint ventures (IJVs), and explores their effect on IJVs' performance and competitive advantage. Using a dyadic dataset collected from top managers of IJVs in China, as well as objective performance data collected separately, the study found empirical support for the effect of MDCs on IJVs' competitive advantage and performance. In addition, MDCs are found to be influenced by IJV resource magnitude, resource complementarity, organizational culture, and organizational structure. The theoretical implications of our findings and future research directions are also discussed.
TL;DR: In this paper, the authors explore the question of why firms offshore particular services to specific geographic locations and find that offshore location choices greatly depend on these services characteristics, and in sometimes surprising ways, and draw implications from their findings for international business theory, policy, and practice.
Abstract: In this paper we explore the question of why firms offshore particular services to specific geographic locations. We draw on research related to the unique characteristics of services in trade and commerce, and more recent analyses of the transnational unbundling and spatial dispersion of business processes. We move beyond a simple assessment of the cost sensitivity or relative sophistication of offshoring services and develop a typology emphasizing the degree to which offshoring services activities are interactive, repetitive, or innovative. We suggest that the location of offshoring projects will depend on the particular mix of these attributes, and test this assertion using a data set of 595 export-oriented offshore services projects initiated from 2002 to 2005 by US and UK company parents in 45 developed and developing countries. We find that offshore location choices greatly depend on these services characteristics, and in sometimes surprising ways, and draw implications from our findings for international business theory, policy, and practice.
TL;DR: In this article, the authors propose the envelope concept of bounded reliability (BRel), an assumption that represents more accurately and more completely the reasons for failed commitments, without invalidating the other critical assumption in conventional transaction cost economics (TCE) thinking, namely the widely accepted envelope concept, namely bounded rationality (BRat).
Abstract: Modern transaction cost economics (TCE) thinking has developed into a key intellectual foundation of international business (IB) research, but the Williamsonian version has faced substantial criticism for adopting the behavioral assumption of opportunism. In this paper we assess both the opportunism concept and existing alternatives such as trust within the context of IB research, especially work on multinational enterprise (MNE) governance. Case analyses of nine global MNEs illustrate an alternative to the opportunism assumption that captures more fully the mechanisms underlying failed commitments inside the MNE. As a substitute for the often-criticized assumption of opportunism, we propose the envelope concept of bounded reliability (BRel), an assumption that represents more accurately and more completely the reasons for failed commitments, without invalidating the other critical assumption in conventional TCE (and internalization theory) thinking, namely the widely accepted envelope concept of bounded rationality (BRat). Bounded reliability as an envelope concept includes two main components, within the context of global MNE management: opportunism as intentional deceit, and benevolent preference reversal. The implications for IB research of adopting the bounded reliability concept are far reaching, as this concept may increase the legitimacy of comparative institutional analysis in the social sciences.
TL;DR: Li et al. as mentioned in this paper developed and tested an interactive perspective that highlights the moderating effects of managerial ties on competitive position-performance relationships and found that though both differentiation and low-cost positions foster foreign firm profitability, the benefit of a differentiation position is conditional on political and business ties in different directions.
Abstract: Despite the prominence of the competitive strategy perspective, it remains unclear whether foreign firms entering China can still adopt a differentiation or low-cost position to achieve superior performance, given the unique market and institutional environments in China. Alternatively, should foreign firms follow conventional wisdom and actively build managerial ties with government officials and business community to enhance their performance? This study develops and tests an interactive perspective that highlights the moderating effects of managerial ties on competitive position–performance relationships. The results indicate that though both differentiation and low-cost positions foster foreign firm profitability, the benefit of a differentiation position is conditional on political and business ties in different directions: political ties impede and business ties strengthen the positive effect of a differentiation position on foreign firms’ profitability. Moreover, foreign firms benefit from their use of business ties, but their profitability suffers when they rely increasingly on the heavy use of political ties.
TL;DR: The JIBS Statement of Editorial Policy states that "Empirical submissions utilizing undergraduate student samples are usually discouraged, except in unusual situations". as discussed by the authors discusses the pros and cons of using student samples in IB research.
Abstract: The JIBS Statement of Editorial Policy states that ‘‘Empirical submissions utilizing undergraduate student samples are usually discouraged.’’ Wording is important here – ‘‘usually’’ does not imply ‘‘always.’’ This statement suggests that while student samples are appropriate, in principle, undergraduate ones are not, except in unusual situations. The purpose of this From the Editors column is to discuss the pros and cons of student samples in international business (IB) research. Are student samples appropriate for developing and testing IB theories? When are student samples appropriate, and when are they not appropriate? Is there a difference between undergraduate and graduate samples? What are the ‘‘best practices’’? This editorial is intended to provide IB researchers with guidelines as to when student samples, and which types of student samples, are appropriate in IB research. Journal of International Business Studies (2009) 40, 361–364.
TL;DR: In this paper, the authors hypothesize and find evidence that offshore outsourcing of administrative and technical services by SMEs is associated with greater extent and scope of internationalization of sales, and that this enhances international competitiveness by enabling SMEs to reduce costs, expand relational ties, serve customers more effectively, free up scarce resources, and leverage capabilities of foreign partners.
Abstract: Scholars typically view offshore outsourcing as a means of reducing the cost of manufacturing activities for large corporations, yet offshore outsourcing may entail administrative and technical services, and may include activities outsourced by small and medium-sized enterprises (SMEs). Drawing on research in international entrepreneurship and services, we hypothesize and find evidence that offshore outsourcing of administrative and technical services by SMEs is associated with greater extent and scope of internationalization of sales. Offshore outsourcing enhances international competitiveness by enabling SMEs to reduce costs, expand relational ties, serve customers more effectively, free up scarce resources, and leverage capabilities of foreign partners.
TL;DR: A retrospective by John H. Dunning on location and the MNE written in the form of responses to questions posed by Rajneesh Narula in an interview recorded at the University of Reading which was shown at the JIBS Decade Award session at the AIB annual meetings in Milan, June 2008.
Abstract: A retrospective by John H. Dunning on location and the MNE, written in the form of responses to questions posed by Rajneesh Narula in an interview recorded at the University of Reading which was shown at the JIBS Decade Award session at the AIB annual meetings in Milan, June 2008.
TL;DR: This paper proposed a multidimensional index of regional and global orientation that can be used in confirmatory studies with econometric methodologies and showed that large multinationals follow home region oriented internationalization paths, although much of the regional effect reported by previous studies in fact reflects strong home country biases.
Abstract: This paper proposes a multidimensional index of regional and global orientation that can be used in confirmatory studies with econometric methodologies. Unlike extant measures, the index is objectively scaled, and controls for home country orientation and market size differences. The index is shown to be consistent with models of internationalization that incorporate different assumptions about investment choice and global competition. Preliminary results show that large multinationals follow home region oriented internationalization paths, although much of the regional effect reported by previous studies in fact reflects strong home country biases.
TL;DR: In this article, the authors address a long-standing discrepancy between theory and practice regarding how firms choose, use, and modify their modes of operation in foreign markets, and propose richer and more realistic conceptualisations of foreign operation modes.
Abstract: We address a long-standing discrepancy between theory and practice regarding how firms choose, use, and modify their modes of operation in foreign markets. Theory typically treats foreign operation modes as choices between well-specified, discrete alternatives. Observation of business practice reveals a “messier” reality. We commonly observe mode packages, within-mode adjustments and mode role changes, yet by and large these aspects of international business development have been relatively ignored in the literature, and in theoretical and empirical research. We propose richer and more realistic conceptualisations of foreign operation modes, and look at their implications for theory and practice.
TL;DR: In this article, the authors examine interrelationships between R&D, exporting and growth of newly listed firms in the UK, Germany, Italy and France, using panel data for 1110 IPOs during the period 1985-2004.
Abstract: The initial public offering (IPO) is an important stage in the life cycle of privately held and entrepreneurial firms. For innovative firms eager to capitalize on their technological advances, an IPO represents a springboard for a rapid international expansion of sales. However, there is little research on the longer-term, post-IPO strategic evolution of newly listed companies, including their internationalization. We build on international entrepreneurship and dynamic capabilities perspectives and examine interrelationships between R&D, exporting and growth of newly listed firms in the UK, Germany, Italy and France. Using panel data for 1110 IPOs during the period 1985–2004, we found that R&D intensity is an important antecedent factor for internationalization of sales. Both R&D and export intensities have a positive effect on the sales growth of newly listed firms. However, R&D intensity is path dependent, and is determined by levels of accumulated intangible assets and debt. In terms of time dynamics, the growth of IPO firms is at its highest level just after the float, whereas export intensity increases as IPO firms mature. We conclude that managers and IPO investors need to take into account not only growth opportunities but also past innovation strategies and financial constraints on managers' strategic choices.
TL;DR: In this article, the effects of individualism and power distance values and practices on employee commitment across cultures were investigated. And the authors found that greater individualism was associated with higher normative commitment, while greater power distance was correlated with higher continuance and normative commitment.
Abstract: The present study reports two sets of meta-analyses of employee commitment across cultures. First, using three-level hierarchical linear modeling, differences in mean levels of commitment were investigated. We examined the effects of individualism–collectivism and power distance values and practices (Hofstede, GLOBE) while controlling for study and industry effects. The findings showed that affective commitment (across 48 countries), continuance commitment (31 countries) and normative commitment (30 countries) were influenced by country-level individualism and power distance. Greater collectivism was associated with higher normative commitment, and greater power distance was associated with higher continuance and normative commitment. Economic variables were found to exert a strong influence on affective and normative commitment means. Second, relationships between affective commitment and turnover intentions (across 26 countries) were found to be somewhat stronger in individualistic settings, whereas the normative commitment–turnover intentions relationships (across 10 countries) were stronger in collectivistic settings. Overall, absolute cross-cultural differences in all analyses were relatively small compared with differences due to study and industry effects, but country-level predictors accounted for substantive proportions of the variance between countries. Implications for commitment and cross-cultural research are discussed, and particular attention is drawn to the need to explore the meaning of commitment across cultural and economic contexts.
TL;DR: This paper found that the share of ownership sought by foreign firms in cross-border acquisitions is influenced by many factors, including the cost of valuing local firm assets, difficulty in integrating local firm managers in culturally distant countries, cost of separating desired assets from the rest of the local firm, and cost of resource commitment under exogenous uncertainty.
Abstract: The extent of ownership in foreign market entry is an important topic in the entry mode literature. Yet the determinants of the share of ownership sought in cross-border acquisitions (CBAs) have not received much research attention. Drawing on multiple theoretical explanations, we develop and test hypotheses on factors influencing the share of equity sought by foreign firms in CBAs. Findings based on a sample of CBAs by US firms show that the share of equity sought is influenced by many factors, including the cost of valuing local firm assets, difficulty in integrating local firm managers in culturally distant countries, the cost of separating desired assets from the rest of the local firm, and the cost of resource commitment under exogenous uncertainty.
TL;DR: This article examined how differences in distinct institutional clusters of countries impact on the vital entrepreneurial activity of venture capital and how individuals, organizations, and their collective action in turn shape those institutions, and found that the venture capital industry exhibits a strong consistency across many dimensions; yet institutions in these two distinct settings result in significant differences in industry practice.
Abstract: This paper examines how differences in distinct institutional clusters of countries impact on the vital entrepreneurial activity of venture capital, and how individuals, organizations, and their collective action in turn shape those institutions. The focus on venture capital offers researchers the opportunity to view an industry that comes from a common root, with strong and consistent traditions, in which to examine how the differing institutional settings impact on behaviors in different markets, and how the institutions themselves may change in these settings. We also focus on emerging economies, since such economies offer a natural laboratory to study the impact of institutional change. Specifically, this paper employs an institutional theory perspective to examine venture capital in two regions of the world that form institutional clusters of countries – Latin America and Asia. It is found that the venture capital industry exhibits a strong consistency across many dimensions; yet institutions in these two distinct settings result in significant differences in industry practice. Therefore this research is able to contribute to both empirical and theoretical understanding of emerging economies, institutions in those environments, and venture capital.
TL;DR: In this paper, the authors developed a real options portfolio perspective on foreign affiliate divestments and found that an affiliate is partially redundant to the option value of a multinational firm's affiliate portfolio if the affiliate shares the manufacturing platform role in the host country with other affiliates, or if macroeconomic conditions of the host countries are highly correlated with those of other countries in which the multinational firm operates affiliates.
Abstract: This paper develops a real options portfolio perspective on foreign affiliate divestments. Affiliates are less likely to be divested in response to adverse environmental change if they represent growth or switch option value to the multinational firm under conditions of macroeconomic uncertainty. However, the affiliate is partially redundant to the option value of the multinational firm's affiliate portfolio if the affiliate shares the manufacturing platform role in the host country with other affiliates, or if macroeconomic conditions of the host country are highly correlated with those of other countries in which the multinational firm operates affiliates. We find strong support for these arguments in tests on a comprehensive sample of 1078 Asian manufacturing affiliates of Japanese electronics multinationals.