ownership structure and ceo compensation implications for the choice of foreign market entry modes drawing on agency theory corporate governance and international business literatures we develop arguments relating equity ownership structures and ceo compensation mix to a firm s choice of foreign market entry modes based on a sample of 432 foreign market entries by 118 non diversified firms in the us manufacturing sector between 1991 and 1998 our findings indicate that greater equity ownership by institutional shareholders and inside directors is positively associated with a preference for full control entry modes in addition our results suggest that ceos with a greater proportion of pay tied to firm long term performance are more inclined to choose full control entry modes over shared control modes

examining generic competitive strategy types in u s and european markets identification of generic competitive strategy types has recently attracted considerable attention most of this research has however focused on competitive strategy of u s businesses in their domestic market the present study extends these findings to markets outside the united states and more specifically europe based on a sample of industrial businesses drawn from the pims database similar dimensions underlying competitive strategy and similar generic types are found among business in the u s and in europe some differences in the performance and business characteristics of certain strategy types were however observed between u s and european markets rate of market growth also appeared to have more significant relation to performance of businesses in europe than in the u s

ownership based entry mode strategies and international performance this study examines the relationship between ownership entry modes and performance the ownership entry modes examined are the wholly owned modes of acquisition and new venture entry and the non wholly owned mode of joint venture entry a theoretical relationship is developed for international entry modes that is based on the contingency characteristics of resource requirements and organizational control factors this model suggests that different entry modes have different performance outcomes based upon their resource and organizational control demands the theoretical model although developed using the eclectic theoretical approach is based largely on concepts and relationships previously delineated in contingency theory our hypotheses suggest that new ventures should outperform joint ventures and joint ventures should outperform acquisitions an empirical test using a sample of 321 japanese firms entering the north american market provides supporting evidence

the entry mode choice of mnes an evolutionary approach abstract the literature on foreign direct investment fdi has recently analysed the nature of the firm s entry mode choice in a foreign market particularly the choice between a joint venture and a wholly owned subsidiary the paper aims at providing further empirical evidence on the influence of some key variables in explaining it the theoretical framework relates to the resource based view of the firm and to the more recent competence based theory it focuses on the concept of the firm as a collection of productive resources and assets built through internal learning processes in the form of evolutionary experimentation the inability of the firm to build internally all the needed knowledge and competencies forces it to acquire them outside influencing the growth strategy of the firm as resources and complementary assets are spread out the firm has to deal with constraints which become more crucial when the firm enters into unfamiliar markets and areas of activity in particular when deciding about the entry mode on foreign markets the firm has to face transaction costs concerning actors and potential partners and their opportunism and costs related to the need for acquiring information about new institutional environments and their working according to this view the resort to co operative solutions and joint ventures allows firms to reduce costs and uncertainty related to foreign markets and rises if technological opportunities tacit skills and competencies constitute an important source of competitive advantage for the firm an empirical analysis with reference to a representative sample of fdi undertaken by italian firms in mining and manufacturing industries over the period 1986 1993 has been developed in order to test the hypotheses

a managerial decision model of international cooperative venture formation this paper develops a model of international cooperative venture formation that is centered on the decisionmaking process of mne executives central issues for managerial decisions are developed from the organizational studies literature a framework delineating the sequence and criteria used in the decision to form international cooperative ventures is developed from these defined issues and from existing models propositions pertaining to the venture formation decision process are outlined

experiential knowledge and cost in the internationalization process using a behavioral approach this study identifies and delineates components of experiential knowledge in the internationalization process three hypotheses are developed and tested they center ar

client perceived performance and value in professional b2b services an international perspective drawing from the resource based view and a contingency approach the authors develop and test a model of the antecedents of client perceived value in the context of international professional business to business services consultants engineers project management it consultants etc in a developing economies setting further we examine the effects of key moderators e g country of origin coo firm s international experience client s buying experience on client perceived performance and value the results generally support the hypotheses that client perceived performance is impacted by a firm s internal resources e g technical skills customer orientation innovation in addition this relationship is contingent upon the coo effect while client perceived value is moderated by the client s buying experience the findings can guide practitioners as to the key drivers of client perceived value and under what conditions this value is maximized

are firm specific advantages location specific too much of the research on the role of firm specific advantages on firms subsidiary ownership preferences has been undertaken in the context of advanced country multinationals specifically u s mncs research has found that u s firms derive ownership advantages from their size experience and technological and marketing superiority perhaps having operated in the most developed and sophisticated home market many u s firms generate unique skills that give them absolute advantages over firms in almost all foreign host locations developing country mncs do not have absolute ownership advantages similar to those of the u s firms the relevance of a particular firm specific characteristic for a developing country mnc may be contingent not only upon the home country characteristics as in the case of u s mncs but also upon host country characteristics this study investigates the subsidiary ownership preferences among korean mncs and finds that the influence of three firm specific advantages technological intensity product differentiation and capital intensity on subsidiary ownership levels is contingent upon whether the subsidiary is located in a relatively less developed or a more developed country as compared to the home country although some authors have suggested that the influence of firm specific advantages may be contingent upon the characteristics of both home and host country locations empirical investigations to this effect have been nonexistent

internationalization of business services an interregional analysis o farrell p n wood p a and zheng j 1996 internationalization of business services an interregional analysis reg studies 30 101 118 internationalization behaviour by business service firms in scotland and the south east of england is analysed evidence is outlined on level of internationalization time profile of entry into foreign markets location of foreign markets mode of entry into first and largest foreign markets and behavioural aspects of international market selection and entry mode choice initial foreign market entries occurred in the early 1960s with south east business service organizations entering foreign markets earlier while there was a surge in internationalization by scottish businesses after 1988 few firms engaged in a process of explicitly choosing a foreign market to enter since the most common entry mechanism was responding to a particular ad hoc order similarly almost 70 of firms made the mode choice decision without considering any alternative modes o farrell p

mode of entry mode into a foreign market the case of u s mutual funds in canada abstract u s mutual fund companies offer funds in canada through two channels foreign direct investment or trade in advisement services the total value of u s controlled funds amounts to 18 of the canadian equity fund market this paper investigates how the fund level and firm level characteristics affect the channel used to enter the canadian market empirical results indicate that the funds offered through fdi are not especially successful in the u s market but are associated with dominant companies whereas the funds offered through trade in advisement services are highly successful in the u s market and are from companies with relatively few successful funds

closing knowledge gaps in foreign markets knowledge and learning are ascribed pivotal roles in firms internationalization processes perceived market uncertainties namely knowledge gaps related to business environments in foreign markets may curb firms inclinations to commit resources to these markets this study explores whether knowledge gaps tend to increase or decrease with time when operating in the foreign market and it discusses which learning components narrow or widen the perceived knowledge gap a theoretical model is developed based on the internationalization process view and the more recent organizational learning perspective including such concepts as overconfidence and absorptive capacity the theoretical model is tested on a set of primary data covering danish and swedish firms and their foreign market operations the results suggest a more subtle relationship between experience and perceived knowledge gaps than the mechanical relationship portrayed by the internationalization process view a relationship in which absorptive capacity and in particular overconfidence play important roles

seeking commonalities or avoiding differences re conceptualizing distance and its effects on internationalization decisions past research established distance s key influence on internationalization however theoretical issues methodological challenges and inconsistent results hinder scholarship on why distance plays such an influential role to address these problems we draw from cognitive research on similarity comparisons to re conceptualize distance and test a model of internationalization decisions analyzing the verbal protocols of executives considering a series of internationalization opportunities we demonstrate that over and above objective distance indicators considerations that reduce distance commonalities and considerations that augment distance differences have distinct effects on decisions of where when and how to internationalize as such our study contributes new insights for understanding the nature and effects of distance across different dimensions of distance and internationalization decisions moreover internationalization theories have come to emphasize different theoretical rationales for explaining the influential role of distance on different decisions by integrating these rationales together with the notion that distance reducing commonalities and distance augmenting differences have distinct implications for internationalization decisions we introduce the notion that it is not only the addition of distance considerations that matters but also the directionality of such changes doing so our study points to new theoretical and methodological insights to help address prior criticisms and advance future research

nationality and subsidiary ownership patterns in multinational corporations this paper examines the notion that the multinational s nationality influences its foreign subsidiary ownership decisions it identifies theoretically meaningful constructs to represent nationality and examines under carefully controlled conditions their influence on subsidiary ownership preferences in american and european multinationals the paper concludes that there are indeed significant differences in ownership preferences among various nationalities that can be explained using cultural as well as economic variables but that these differences may become weaker in larger multinationals

local knowledge transfer and performance implications for alliance formation in asia foreign firms in host country environments frequently face location based disadvantages this study proposes three means channels of overcoming local knowledge disadvantages based on a sample of 558 japanese joint ventures jvs located in southeast and east asia we find that partnering with local firms the first channel can be a primary strategy for accessing local knowledge and improving jv performance jv experience in the host country the second channel also mitigates local knowledge disadvantages and leads to increased jv performance the third channel the foreign parent s host country experience leads to increased performance in the absence of a local partner however when a jv is formed with a local partner increased parent experience in the host country leads to decreased performance suggesting that the need for a local partner declines as parent experience in a host country increases

host market government corruption and the equity based foreign entry strategies of multinational enterprises while extant theory suggests that the pervasiveness of host market government corruption should influence the equity ownership decisions of foreign investing multinational enterprises mnes empirical research has produced inconclusive results we leverage insights from transaction cost economics to advance an uncertainty oriented framework which can be used to explain the impact of host market government corruption on the equity based entry strategies of mnes we disaggregate government corruption into two distinct components grand corruption and petty corruption we propose that grand and petty corruption precipitate different types of uncertainty environmental and behavioral which motivate mnes to vary their equity based foreign entry strategies entry mode and partnering hypotheses pertaining to the entry strategies of mnes under conditions of more pervasive grand and petty corruption are developed and tested with a sample of 643 japanese investments in 30 countries between 2004 and 2007 we find that the main effect of grand corruption and the interaction between grand and petty corruption significantly impact a mne s entry mode further while more pervasive grand corruption increases the likelihood that a mne will engage in a joint venture investment with a host country partner we find that an increase in petty corruption heightens a mne s preference to invest with a home country partner

beyond entry mode choice explaining the conversion of joint ventures into wholly owned subsidiaries in the people s republic of china while there is a vast amount of research on firms choice of ownership form when entering a foreign market little attention has been paid to changes in ownership forms of operation abroad after initial entry using transaction cost economics and institutional theory we identify a number of factors that may help to explain the likelihood of foreign firms converting their joint venture with a local firm into a wholly owned subsidiary we formulate a number of hypotheses and test them against data collected through a questionnaire survey of managers representing foreign subsidiaries in the people s republic of china prc that are run either as international joint ventures ijvs or as wholly owned foreign subsidiaries wfoes that have recently been converted from ijvs into a wfoe the paper contributes to research by showing that transaction cost based thinking is useful for explaining not only the initial choice of ownership mode when entering a new market but also the potential subsequent changes of this ownership mode by combining transaction cost theory with arguments from institutional theory the study identifies a number of factors that contribute to explaining post entry changes of foreign firms ownership forms in the prc and provides empirical evidence of this phenomenon

an organizational model for understanding internationalization processes we propose an organizational model for understanding internationalization processes we argue that these processes differ with the type of organization we compare the internationalization processes of three organization types the mass production organization the disaggregated production organization and the project based organization each organization type responds differently to critical elements of the internationalization process namely the focus of entry the degree of presence and physical presence requirements in the foreign market which in turn influence what modal forms are adopted as the process progresses consequently we observe different approaches to resource commitment in the foreign market over time

strategic market entry factors and market share achievement in japan in developing entry marketing strategies for new product markets companies might be advised to target product markets where significant market shares are likely to be achieved the literature on market share change is reviewed to identify situational and marketing strategy factors associated with market share achievement certain hypotheses suggested by this and related literatures were then tested using a database of products introduced into the japanese market the results of this analysis indicate that a few key situational and marketing strategy variables account for a large proportion of the variation in achieved market share in japan

control modes in international service operations the propensity to franchise what determines a service firm s organizational choice between equity based control and franchising this question which has elicited some theoretical answers and a few empirical tests in a domestic setting has never been addressed in an international context before this study explains the mode of control chosen in terms of a theoretical framework which borrows from agency theory and transaction cost analysis the propensity to franchise internationally was found to be directly related to i monitoring costs associated with geographical and cultural distance between the principal franchisor and its foreign agents franchisees ii the principal s international experience and iii the degree of host countries contextual uncertainty but inversely related to the service firm level of brand name asset specificity

determinants of the share of equity sought in cross border acquisitions 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

integration of the sales force an empirical examination this article develops and tests a model of integration of a marketing function personal selling the model derived from transaction cost analysis as developed principally by williamson is formulated as a logistic function which is estimated with data from the electronic components industry as expected integration is associated with increasing levels of asset specificity difficulty of performance evaluation and the combination of these two factors contrary to the transaction cost model neither frequency of transactions nor interaction of specificity and environmental uncertainty is significantly related to integration the transaction cost model improves significantly upon the fit of a simple model relating integration to company size alone these results suggest that for studying transactions of this kind it is fruitful to view the firm as a governance structure

export market oriented activities their antecedents and performance consequences this paper extends the study of market orientation into the international arena by developing and testing hypotheses relating to the antecedents to and consequences of market oriented activities in firms export operations export experience export dependence and coordinating capabilities were found to be positively related to export market oriented activities in turn export market oriented activities were positively associated with aspects of export performance

performance and survival of joint ventures with non conventional ownership structures the international joint venture jv literature has focused on two parent jvs formed between one foreign and one local firm yet other types of jvs exist this paper identifies four distinct forms of jvs based on the jv partners nationality and equity affiliation these are i jvs that are formed between affiliated home country based firms ii jvs that are formed between unaffiliated home country based firmsl iii jvs that are formed between home country based and local firms and iv jvs that are formed between home country and third country based firms our analysis of 737 japanese jvs in asia demonstrates that the conventionally assumed form of jv represented only 30 percent of the total further each of the four jv forms significantly differed in terms of incidence performance and survival likelihood

sterling and oil discoveries the mystery of nonappreciation abstract this paper analyzes the impact of north sea oil discoveries on the value of sterling by looking at market reactions to announcements of oil discoveries it shows there is no evidence for the common view that oil discoveries led to an appreciation of sterling it also explores alternative explanations for the nonappreciation of sterling

transaction cost determinants and ownership based entry mode choice a meta analytical review entry mode choice is a critical ingredient of international entry strategies and has been voluminously examined in the field the findings however are very mixed especially with respect to transaction cost related factors in determining the ownership based entry mode choice this study conducted a meta analysis to quantitatively summarize the literature and empirically generalize more conclusive findings based on the 106 effect sizes of 38 empirical studies the meta analysis shows that the findings of the existing studies are moderated to varying degrees by both study setting factors and statistical artifacts although the combined overall effects of transaction cost based determinants are consistent with the predictions of transaction cost economics we extensively discuss the implications of meta analytical results especially moderating effects of location country of origin industry type and statistical artifacts highlight the measurement adequacy equivalence and multidimensionality of transaction cost determinants and present our suggestions to improve theoretical inquiries and empirical verifications on entry mode choice

country familiarity in the initial stage of foreign market selection focusing on the initial stage of foreign market selection i e narrowing a set of potential countries from which to make a final choice we theorize that manager s country familiarity influences both the decision making process and outcome we hypothesize that with increasing country familiarity a manager investment of cognitive effort process first increases and then decreases and b the likelihood of a country being included for further consideration outcome also increases and then decreases we further hypothesize that the effects of country familiarity are contingent on the managers international experience empirical evidence from verbal protocol analyses of managers provides strong support to our arguments these findings contribute to the emergent literature on the critical role of cognition in decision making about foreign markets manager cognition potentially influences sequential non sequential entry decision making possibly explaining some previously observed exceptions to internationalization process theory the contingent role of international experience further stresses that the influence of cognition in internationalization decision making is both important and complex involving at least innate cognitive processes idiosyncratic knowledge and international experience we discuss the theoretical implications along with practice implications of country familiarity and intuitive decision making in foreign market selection

internationalising in small incremental or larger steps we argue that companies may enter foreign environments either incrementally as suggested by long established theory or by taking larger steps that may result in lower initial performance but through learning and experience lead to increased performance in future expansions this idea is corroborated by the experience of dutch companies entering into central and eastern europe we also find that expansion steps may be too large thereby limiting the exploration of foreign environments our study suggests that sequential internationalisation strategies do still matter and that companies have to balance exploitation and exploration in internationalisation

determinants of foreign investment of u s advertising agencies this paper investigates the impact of several factors on the foreign investment of u s advertising agencies by using the theories on the determinants of foreign direct investment by manufacturing firms for the two years examined the hypotheses about the impact of host country market size host country geographic proximity firm size firm s international operations experience oligopolistic reaction and presence of home country customers abroad are all confirmed this paper also investigates the impact of oligopolistic reaction among the top ten and the second ten largest agencies and finds a stronger impact for the former

expanding rtas trade flows and the multinational enterprise we test the relationship between the size of regional trade agreements rtas and openness by using a gravity equation with multilateral trade factors our sample includes 11 rtas seven with constant membership and four with expanding membership regional trade bias declines with the size of the club three of the four expanding rtas have already surpassed their optimal size we also explore the link between openness of the rta and the geographic strategy of the multinational enterprise we find strong evidence in favor of the regionalization strategy which has been enhanced by the presence of rtas

control and performance in international joint ventures the authors examine the meaning of control in international joint ventures ijvs and the relationships of potential means of control in such organizations to the performance satisfaction of the foreign partner they propose a conceptual model that provides both a traditional ownership focused internalization perspective on those issues and an integrated approach combining a broader transaction cost interpretation of control with a resource input based bargaining power model a set of simultaneous structural equations with endogenous explanatory variables provides multiple possible paths from various resource and power inputs through different means of control to perceived performance satisfaction in such a model intermediate variables act both as dependent and independent variables thus the complex theoretical interactions of the variables are modeled more comprehensively and realistically than in single equation models to test the model and compare the theoretical relationships the authors used dat

social knowledge as a control system a proposition and evidence from the japanese fdi behavior building upon the concept of clans this paper introduces the value of social knowledge as a control mechanism available for an mnc to manage its foreign subsidiaries social knowledge is defined as one s ability to understand and predict others general patterns of behavior the hypotheses are empirically tested with japanese fdi data into four host countries the united states singapore taiwan and korea the results offer broad support for the proposition that for mncs with social knowledge the need to resort to ownership for control purposes is reduced

the experience factor in foreign market entry behavior of service firms the paper examines the effect of international experience on service firms selection of foreign markets and entry modes the investigation utilizes survey date from 151 united states based service firms results on market selection suggest that as their experience increases and becomes geographically more diversified service firms tend to choose markets that are culturally less similar to their home country on entry mode choice the paper departs from traditional linear conceptualizations and hypothesizes a u shaped relationship between experience and propensity for integrated entry modes results generally support the hypothesis the paper explains these findings and describes how service firms resemble and differ from manufacturing firms in their foreign market entry behavior

the effect of specificity of experience on a firm s perceived importance of institutional knowledge in an ongoing business we study how three types of firm experience ranging from the specific to the general influence the perceived importance of institutional knowledge in the ongoing business of internationalising firms based on a sample of 101 small to medium sized firms the three types of firm experiences are international country and ongoing business the results show that firm experience within the ongoing business and the experience from multiple past business deals in various countries develop institutional knowledge whereas experience from multiple past business deals in a specific country does not the theoretical contribution of this paper is that it establishes a link between different kinds of experience and managerial cognition in terms of institutional knowledge in addition it emphasises that firms develop institutional knowledge from multiple diverse country experiences and experience in the specific ongoing business rather than experiences at the level of the country

the management of countertrade factors influencing success countertrade success was found to be higher for large firms that were experienced in exporting and in countertrade operations could accommodate countertrade takebacks and valued vertical integration exported high value high visibility complex products had a low reputation for quality and had excess capacity success was also higher if the importer valued quality had low technical proficiency was inexperienced in exporting faced barriers in export markets had a high cost of forward contracts foreign exchange constraints and faced a disequilibrium exchange rate

multinational experience and the creation of linkages with local firms evidence from the electronics industry the paper focuses on the nature and determinants of multinational firms creation of linkages with local firms with specific reference to the electronics industry the study of the recent evolution of international operations in this sector seems to highlight a relevant and somewhat generalisable pattern of industrial organisation and dynamics it is argued that the nature and intensity of multinational companies involvement into linkages with local counterparts are strongly influenced by a combination of factors that are partially inter dependent but still rely on different decision making centres on the one hand host countries long term investment policies in the field of human capital training and accumulation and on the other hand firms decisions to take roots in local contexts through the creation of foreign subsidiaries it is further suggested that human capital and subsidiaries will particularly favour the development of collaborative linkages with local firms compared to previous work of the authors on this subject this paper utilises an expanded and updated data set covering international operations of the top european and us electronics companies over the 1984 1995 period and attempts a more detailed and in depth analysis concerning the nature determinants and evolution in time of international growth strategies

the decision maker and export entry and expansion this paper examines the varied empirical findings of the relationship between firm individual characteristics and foreign entry expansion behavior the results support the view that such activity is neither exclusively determined by structural or managerial factors and is really the result of interaction between both types of variables the paper proposes that foreign entry and expansion can best be understood as an adoption of innovation type behavior

the effect of national culture on the choice of entry mode 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

censored regression estimation under unobserved heterogeneity a stochastic parameter approach this article presents a methodology for addressing the problem of unobserved heterogeneity in the context of regression models based on censored samples the effectiveness feasibility and usefulness of the proposed approach is illustrated by means of an empirical application as well as a simulation experiment the article demonstrates that censored regressions that control for the presence of unobserved heterogeneity perform substantially better in comparison to their counterparts in which the problem of unobserved heterogeneity is ignored

regional influences on foreign market development by business service companies elements of a strategic context explanation o farrell p n wood p a and zheng j 1998 regional influences on foreign market development by business service companies elements of a strategic context explanation reg studies 32 31 48 the internationalization literature both of manufacturing and services has concentrated upon the issue of entry and largely ignored post entry behaviour and market development a major aim of this paper therefore is to present evidence on foreign market development by business service firms in two uk regions scotland and the south east of england and the amsterdam urban region of the netherlands following a review of the relevance of the internalization approach the development stages paradigm network analysis and a strategic choice framework to internationalization by business services empirical findings are presented from the three regions on trajectories of foreign market development modal shifts the incidence of proactive market strategies and the characteristics of major clients a behaviou

mimetic and experiential effects in international marketing alliance formations of us pharmaceuticals firms an event history analysis alliances are recognized as an indispensable tool for managers operating in a global business environment and as a fundamental stage of the internationalization process of the firm drawing on a co evolutionary framework this article investigates the mimetic and experiential effects in international alliance formation we focus on a critical unresolved issue in the literature what is the role of mimetic behavior and previous alliance experience in mitigating the uncertainty associated with engaging in cross border operations an event history analysis of 792 international marketing alliance formations initiated by 317 firms in the us pharmaceutical industry is employed to test the hypotheses the findings of two different hazard rate models reveal significant complex effects of density and cross border alliance experience on the propensity to engage in new international marketing alliances

customer involvement and service firm internationalization performance an integrative framework to overcome the costs of doing business abroad researchers have suggested either legitimacy or efficiency based solutions however both types of solutions still treat host country customers as external to the theory we highlight the role of customers in the international professional business service setting and argue that customer involvement is positively related to the perceived internationalization performance of multinational corporations mncs mncs with managers who perceive higher legitimacy pressures and greater needs for local knowledge tend to undertake greater efforts to build customer involvement furthermore we develop a configuration framework between perceived strategic needs and mncs capabilities specifically mncs that match relational capability with legitimacy needs and absorptive capacity with knowledge needs are more likely to engage in customer involvement our survey of 175 chinese mncs provides evidence that customer involvement is positively related to perceived internationalization performance when mncs relational capabilities are stronger the positive relationship between legitimacy pressure and customer involvement increases by contrast mncs with greater perceived market ambiguity improve customer involvement only when they have stronger absorptive capacity we conclude that mncs may simultaneously reduce legitimacy and efficiency costs through customer involvement after considering the fit between perceived environmental pressures and firm capabilities

internalization and experience japanese banks international expansion 1980 1998 we use an interdisciplinary approach to investigate multinational banks foreign activities we bridge core concepts from the stages theory of internationalization to internalization theory to extend the literature on the defensive expansion hypothesis unlike the primarily aggregate levels of analysis employed in previous research on multinational banking we utilize a firm level analysis of the internationalization experiences of 21 japanese banks in the period 1980 1998 we find that banks undertake foreign direct investment to secure internalization benefits by following their existing clients and to achieve economies of scale in the application of their intangible assets in international markets the magnitude of these relationships however is contingent upon the level of a bank s experience in the host countries consistent with predictions from internationalization theory we find that the motivations for international expansion can change over time

multinational corporation internationalization in the service sector a study of japanese trading companies this paper extends chang s 1995 sequential investment theory to include multinational corporations mncs in service industries given this sector s large and growing impact on the global economy to facilitate an examination of service mnc internationalization patterns we develop a new typology of service investment i e core global related local unrelated global and unrelated local based on business relatedness and location specificity we test this typology on a sample of large japanese trading companies our results suggest that the initial investments of service mncs are closely related to their core businesses and are less location specific but that subsequent investments are less related to firms core services and are more location specific a pattern similar to the traditional view on manufacturing mncs we extend our analysis to examine several case studies to provide a richer context for these findings in addition we examine the performance implications of internationalization our findings suggest that firms that internationalize through early investments that are closely related to their core activities outperform those in unrelated businesses over time but that this performance gap between related and unrelated foreign investments diminishes in more advanced stages of internationalization

an empirical examination of the form of the relationship between multinationality and performance this paper reports findings from a study that systematically evaluated the form of the relationship between multinationality and performance in contrast to most of the prior conceptualizations that rely on linear monotonic models of the linkage this study examined a curvilinear model that addresses both the costs and benefits associated with multinationality it used time series techniques to capture both the static and dynamic components of the relationship results show that increasing levels of multinationality bring significant performance benefits up to a certain optimum level beyond which benefits begin to decelerate while costs accelerate

evaluating export promotion programmes uk overseas trade missions and export performance this paper examines the extent to which firms knowledge and structural characteristics as well as firms behaviour in foreign markets following trade mission participation impacts upon trade mission success and export performance the findings suggest that 1 a diversification strategy in terms of export markets benefits future expansion into new foreign markets 2 specific knowledge about the targeted markets should be acquired prior to participating in the trade missions 3 communication with potential business partners should be established prior to participating in the trade missions and 4 the business relationships established before and during the trade missions should be cultivated through regular contacts using not only communication technology but also regular visits in summary overseas trade missions contribute to the generation of incremental sales in foreign markets by enhancing the relationship building process between business partners

the influence of firm s size and international experience on the ownership structure of italian fdi in manufacturing the literature on foreign direct investment fdi has analysed the entry mode choice by multinational enterprises mnes from several theoretical viewpoints nevertheless previous studies have mainly focused on the behaviour of large and established mnes while little attention has been given to small and medium sized firms the paper aims at providing further empirical evidence on the role of firm size and international experience in influencing the ownership structure of fdi the main hypothesis is that smaller firms characterised by financial and managerial con straints as well as firms lacking experience in managing foreign operations suffer from a condition of adverse asym metry in information costs compared to their competitors therefore they are forced to act prudently minimising risk and thus preferring a less control arrangement of foreign sub sidiaries a binomial logistic model is developed with reference to manufacturing foreign direct investments undertaken by italian firms in the period 1986 1993

explaining the national cultural distance paradox past studies of the relationship between national cultural distance and entry mode choice have produced conflicting results some scholars find cultural distance associated with choosing wholly owned modes others find cultural distance linked to a preference for joint ventures in this paper we provide both theoretical and empirical evidence to explain the discrepant findings and thus help to resolve the national cultural distance paradox

social ties and foreign market entry the social dynamics which precede international exchange are considered in light of data collected on 133 foreign market entries from a sample of highly internationalized manufacturing firms consistent with research done in the social network field the findings support the hypothesis that knowledge of foreign market opportunities is commonly acquired via existing inter personal links rather than collected systematically via market research this study thus contributes towards an understanding of those antecedent conditions that lead to the formation of export exchange relationships

the order and size of entry into international markets abstract when entering markets managers must decide when to enter as well as how many resources to commit to the entry the study finds that larger initial resource commitments do not result in higher market share and market survival in international markets instead to improve performance in international markets managers should strive to be first entrants further first entrants typically commit fewer resources suggesting that this strategy can be pursued by firms with limited resources

letter from the editor in chief time in international business issue 40 4 consists of eight articles seven of which were acceptedfor publication by former jibs editor in chief arie y lewin andone under my watch while each of the articles makes importantcontributions to our knowledge of international business ib studies i would like to highlight those that are related to time time in ibeconomists think of time in terms of statics comparative staticsand dynamics static analyses focus on equilibrium situations e g the price where quantity demanded equals quantity supplied comparative statics focuses on pre vs post situations when anexogenous change affects behavior and outcomes e g changes inincome or tastes affect market price dynamic analyses trace thepath or processes for beginnings transitions and endings whetheralone or in a coevolutionary framework much and perhaps most ib research either ignores time orfocuses solely on the comparative statics of predicting how achange in the business environment or government policies attime t affects mne strategies and performance at time t

what differences in the cultural backgrounds of partners are detrimental for international joint ventures an international joint venture implies that a firm has to cooperate with a partner with a different cultural background in this study hypotheses about which differences in national culture are most disruptive for international joint ventures were developed and tested using hofstede s five dimensions the study focused on how these dimensions affect the survival of international joint ventures as well as their incidence relative to wholly owned subsidiaries the hypotheses were tested on longitudinal data about 828 foreign entries of twenty five dutch multinational in seventy two countries between 1966 and 1994 the database which spans almost three decades was also used to provide new evidence on a key assumption of hofstede s work that cultural values are stable over time

mitigating risk in international mergers and acquisitions the role of contingent payouts previous internationalization studies have focused on the entry modes employed by multinational firms but have not considered the contractual heterogeneity that underlies each mode it is important to examine these contractual details as the firm may be able to obtain some of the benefits typically associated with one entry mode while selecting another in the case of international mergers and acquisitions m as a key contractual variable is whether the parties agree to a performance contingent payout structure which can mitigate the risk of adverse selection in this paper we examine the antecedents of contingent payouts in the form of earnouts and stock payments the results indicate that firms lacking international and domestic acquisition experience turn to contingent payouts when purchasing targets in high tech and service industries firms tend to avoid contingent payouts in host countries with problems with investor protection and legal enforceability

limits to international entry mode learning in smes despite extensive research the literature is unclear about the circumstances under which a firm learns from its past foreign entry modes and how this experiential learning is related to future mode choices building on the internationalization process ip model and the idea that some experiential learning is location bound while other learning is non location bound we develop and test theory to explain how experiential learning about foreign operation modes and markets impact future mode choices in new foreign markets overall we argue that mode based experiential learning is limited through the repeated use of a specific operation mode firms develop routines and processes that are non location bound and can be replicated in new foreign markets leading to the use of this same mode type in new locations but when complemented by experiential learning about a target market region firms opt for operation modes with greater commitment in new foreign markets drawing on a sample of german smes and examining four different types of entry modes we find some support however we also identify a number of notable exceptions to our theory in this way we help provide unique new insights informing future ip model experiential learning and international entry mode research

service multinationals conceptualization measurement and theory the application of mne definitions measurements and theories to international services is still in its infancy despite the considerable size and growth of this sector there are problems in defining classifying measuring comparing and explaining service mnes but they do not require special definitions and theories still research to date suggests 1 delinking the concepts of multinational enterprise and foreign direct investment under certain conditions and 2 qualifying the nature of ownership internalization and location advantages in fdi theory as far as service mnes are concerned

key characteristics in the choice of international technology transfer mode the choice between licensing and direct investment as a vehicle for international technology transfer is hypothesized to be related to characteristics of the individual technology parent corporation and the host country involved in the transfer a set of hypotheses regarding these relationships are developed and tested in a logit statistical model for a sample of 1 226 technology transfers we find that hypotheses regarding the effects of technology and parents characteristics are strongly supported by this analysis hypotheses regarding the effect of host country characteristics on transfer patterns receive mixed support

human capital in multinational enterprises does strategic alignment matter this research proposes a strategic human capital alignment framework to examine whether the alignment between subsidiary strategy i e export oriented vs local market oriented strategy and human capital i e parent firm vs local specific human capital is positively related to subsidiary performance in multinational enterprises mnes we further explore two important exogenous i e foreign exchange rate change and endogenous i e mne international experience boundary conditions since they may adjust the positive effect of strategic human capital alignment on performance the analysis based on 5604 subsidiary observations of 423 mnes from 1990 to 2012 confirms the positive synergic effect of aligning subsidiary strategy and human capital and shows the moderating effects of foreign exchange rate change and mne international experience by presenting the importance of subsidiary strategy global staffing alignment and the roles of external economic environments and internal organizational capabilities as boundary conditions the strategic human capital alignment framework suggests that what makes human capital valuable for the firm is its alignment with strategic orientation thus managers should carefully deploy the appropriate type of human capital to fulfill the requisite organizational strategy and take into account changing external and internal contextual conditions in applying the framework

the relationship between international diversification and performance in service firms international diversification is a growth strategy that has a major potential impact on firm performance the relationship between international diversification and firm performance has been extensively studied in the international strategy literature a major gap in the literature has been the non existence of studies that have examined the effect of international diversification on performance in service firms previous studies that have tested the international diversification performance relationship were based on samples of manufacturing firms we argue that the form of the relationship between multinationality and performance is different in service firms we provide a theoretical argument for this claim and hypothesize that there is a u shaped curvilinear relationship between multinationality and performance in service firms our sample consists of 81 major german service firms spanning across four industries results show that there is support for a u shaped curvilinear relationship based on the findings implications and directions for future research are provided

the use of process and output controls in foreign markets this study builds upon previous control research to propose a model of formal controls used in managing activities performed in foreign markets theoretically derived contingency relationships are also proposed to assess the performance consequences of different formal control types the findings support the importance of internal and external sources of uncertainty in determining the type of control used partial support was also found for the premise that the fit between the type of control used and the type of uncertainty perceived will contribute to superior performance

firm and country level trade offs and contingencies in the evaluation of foreign investment the semiconductor industry 1994 2002 this paper examines the joint impact of firm and country level factors on the international plant location decisions of semiconductor firms from 1994 2002 we find that these factors interact to influence the location decisions of firms investing abroad in a given host country firms with more advanced technological capabilities are more likely to make investments in countries with greater technological sophistication but not in politically hazardous countries where they face greater expropriation hazards firms with less advanced technology are more willing to accept a trade off between country level political hazards and technological sophistication firms also trade off own versus other firm experience as sources of critical knowledge regarding the foreign investment environment

the influence of the management team s international experience on the internationalization behaviors of smes why are some small and medium sized enterprises smes more successful in selling outside their domestic markets than are other smes in the same industry although the traditional explanation is that firms can gain valuable knowledge and resources as they become older and larger small and young firms are not necessarily disadvantaged if they develop other mechanisms to acquire the requisite knowledge and resources we examine the role of the management team s international experience as such a mechanism for the internationalization of canadian software product firms we show that internationally experienced management teams have a greater propensity to develop foreign strategic partners and to delay less in obtaining foreign sales after start up and that these behaviors are associated with a higher degree of internationalization

organizational learning about new international markets exploring the internal transfer of local market knowledge this study examines the transfer of local market knowledge within the diversified firm as its divisions expand into a new host country within the u s based corporations in our sample both the nature of local market knowledge itself and differences in organizational structures significantly influence the extent of internal knowledge transfer among divisions the results suggest that as firms expand into new international markets their organizational learning processes differ significantly

the uppsala internationalization process model revisited from liability of foreignness to liability of outsidership 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

learning to compete in a transition economy experience environment and performance does organizational learning as measured by experience in a host country affect international expansion performance if so does such a relationship between experience and performance hold over time how do the environmental forces in the host country affect such a relationship focusing on organizational learning by multinational enterprises mnes operating in a transition economy this study answers these three critical questions by exploring the relationships among experience environment and performance at the subsidiary level based on a recent survey of 108 mne subunits operating in china we find that the intensity and diversity of host country experience is an important predictor of subunit performance while the positive effect of the intensity of experience on performance diminishes over time the impact of the diversity of experience on performance remains unchanged moreover for mnes experiencing greater environmental dynamism complexity and hostility there is a stronger positive relationship between experience and performance

herd behavior and investment comment in an influential paper david s scharfstein and jeremy c stein 1990 modeled sequential investment by agents concerned about their reputation as good forecasters consider an agent who acts after observing the behavior of another ex ante identical agent scharfstein and stein argue that reputational herding requires that better agents have more correlated signals conditionally on the state of the world they claim that without correlation the second agent would have no incentive to attempt to manipulate the market inference about ability by imitating the behavior of the first agent in this note we show that in their model correlation is not necessary for herding other than in degenerate cases our clarification exploits a parallel with statistical herding introduced by abhijit v banerjee 1992 and sushil bikhchandani et al 1992 henceforth bhw bhw feature investors who maximize expected profits in a common value environment and have access to conditionally independent private signals of bounded precision while still observing the behavior of others eventually the evidence accumulated from observing earlier decisions is sufficiently strong to swamp the private information of a single decision maker thereafter everyone rationally copies the prevailing behavior we notice that payoffs have a common value nature in both the statistical and the reputational model the observed behavior of other agents possibly affects the probability belief attached to different states of the world as well as the payoff conditional on each state herding arises from the interaction of these two channels affecting the expected payoff be it physical or reputational positive differential conditional correlation of signals in the reputational model is tantamount to the introduction of positive payoff externalities in the statistical model this reinforces the tendency to herd already present with independence the fact that differential conditional correlation is not needed for herding is a clear strength of the reputational herding model it is not necessary to assume common unpredictable components of returns at the individual level in order to rationalize the empirical findings that individual prediction errors of security analysts are correlated after setting up scharfstein and stein s model in section i we summarize their findings in section ii and provide a unified definition of herd behavior in section iii section iv contains our critique of their line of argument and clarifies the role of differential conditional correlation in section v we propose alternative robust scenarios where herding would indeed be driven by correlation section vi concludes