scholarly journals Distance factors and establishment mode choice of emerging‐market multinationals: The moderating effect of administrative distance

2021 ◽  
Author(s):  
Laura Rienda ◽  
Diego Quer ◽  
Rosario Andreu
Keyword(s):  
Emerging Market ◽  
Mode Choice ◽  
Moderating Effect ◽  
Emerging Market Multinationals ◽  
Establishment Mode

scholarly journals Greenfield investments or acquisitions? The influence of distance on emerging-market multinationals

2019 ◽  
Vol 57 (5) ◽  
pp. 1223-1236 ◽  
Author(s):  
Laura Rienda ◽  
Enrique Claver-Cortes ◽  
Diego Quer ◽  
Rosario Andreu
Keyword(s):  
Emerging Market ◽  
Mode Choice ◽  
Behavioral Pattern ◽  
Foreign Direct Investments ◽  
Developed Country ◽  
Content Type ◽  
Emerging Market Multinationals ◽  
Greenfield Investments ◽  
The Relationship ◽  
Establishment Mode

Purpose In recent years, emerging-market multinationals (EMMs) are receiving significant attention in the international business literature. They represent a challenge for the conventional wisdom, mainly derived from the behavior of developed-country multinationals (MNEs). The purpose of this paper is to analyze how different cross-national distances, namely cultural, administrative, geographic and economic, may affect establishment mode choice by Indian MNEs. Design/methodology/approach Data are collected from 328 outward foreign direct investments carried out by Indian MNEs in 73 countries from 1991 to 2014. A binomial logistic regression analysis is used to test the hypotheses. Findings The results show that cultural and administrative distances negatively affect the choice of an acquisition. Moreover, firm size, acquisition experience, host country experience, industry, belonging to the G20 alliance and being a state-owned enterprise also influence establishment mode choice. Originality/value This is one of the first studies that investigate the relationship between distances and establishment mode choice by Indian MNEs. The findings suggest that they follow a different behavioral pattern among EMMs, since their internationalization decisions are closer to those of developed-country MNEs.

scholarly journals Institutional distance, establishment mode choice and international experience: the case of Indian MNCs

2018 ◽  
Vol 12 (1) ◽  
pp. 60-80 ◽  
Author(s):  
Laura Rienda ◽  
Enrique Claver ◽  
Diego Quer
Keyword(s):  
Multinational Corporations ◽  
Cultural Distance ◽  
Emerging Market ◽  
Mode Choice ◽  
Political Risk ◽  
International Experience ◽  
Institutional Distance ◽  
Foreign Direct Investments ◽  
Content Type ◽  
Establishment Mode

Purpose Focusing on the growing importance of Indian multinational corporations in the past decades, this paper aims to understand how establishment mode decisions in a foreign market can differ depending on a series of factors. Specifically, the authors examine how institutional distance, including cultural distance and political risk, could affect these decisions, and how international acquisition experience could moderate this relationship. Design/methodology/approach The authors test their hypotheses using data from 114 outward foreign direct investments between 2000 and 2010. Findings The findings suggest that experience in international acquisitions increases the likelihood of subsequent acquisitions in high-risk and culturally distant countries. Originality/value By considering that the country of origin also matters, some differences among emerging-market multinational corporations (MNCs) may arise. Besides, since empirical research focusing on emerging-market MNCs is scarce, more empirical studies are needed to analyze the influence of cultural distance and political risk on some decisions. In the case of India, there are also additional motivations for analyzing those institutional factors. First, since this is a country with significant linkages to Western countries, it is interesting to know if the influence of cultural distance is similar or not. Second, there is a lack of empirical evidence on the relationship between political risk and establishment mode choice in the case of Indian MNCs. To fill this gap, the first aim of this paper is to analyze how cultural distance and political risk affect the establishment mode choice of Indian MNCs. Moreover, recognizing international experience to be an important factor in explaining international expansion, we focus on international experience interactions with sources of uncertainty inherent in the host market.

Home country underdevelopment and internationalization

2017 ◽  
Vol 27 (3) ◽  
pp. 217-230 ◽  
Author(s):  
Alvaro Cuervo-Cazurra ◽  
Ravi Ramamurti
Keyword(s):  
Emerging Markets ◽  
Comparative Advantage ◽  
Home Country ◽  
Emerging Market ◽  
Content Type ◽  
Emerging Market Multinationals ◽  
Economic Underdevelopment ◽  
Conceptual Paper ◽  
Practical Implications ◽  
At Home

Purpose The purpose of this study is to use the rise of emerging-market multinationals as a vehicle to explore how a firm’s country of origin influences its internationalization. Design/methodology/approach This paper is a conceptual paper. Findings We argue that the home country’s institutional and economic underdevelopment can influence the internationalization of firms in two ways. First, emerging-market firms may leverage innovations made at home to cope with underdeveloped institutions or economic backwardness to gain a competitive advantage abroad, especially in other emerging markets; We call this innovation-based internationalization. Second, they may expand into countries that are more developed or have better institutions to escape weaknesses on these fronts at home; we call this escape-based internationalization. Research limitations/implications Comparative disadvantages influence the internationalization of the firm differently from comparative advantage, as it forces the firm to actively upgrade its firm-specific advantage and internationalize. Practical implications We explain two drivers of internationalization that managers operating in emerging markets can consider when facing disadvantages in their home countries and follow several strategies, namely, trickle-up innovation, self-reliant innovation, improvisation management, self-reliance management, technological escape, marketing escape, institutional escape and discriminatory escape. Originality/value We explain how a firm’s home country’s comparative disadvantage, not just its comparative advantage, can spur firms its internationalization.

Catch-up innovation in emerging market multinationals

2020 ◽  
Author(s):  
◽  
Li Chen
Keyword(s):  
Multinational Firms ◽  
Resource Constraints ◽  
Emerging Market ◽  
Measurement Model ◽  
University Of Missouri ◽  
Emerging Market Multinationals ◽  
Output Performance ◽  
Moderating Factors ◽  
Catch Up ◽  
Product Output

[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT REQUEST OF AUTHOR.] In this dissertation, I study how emerging market multinationals innovate to catch up with incumbent global leaders. By extending entrepreneurial perspectives into the emerging market context, I provide a comprehensive framework to account for EMNEs' distinctive innovation practices. In essay one, I conceptualize what I refer to as catch-up innovation as a multi-dimensional construct consisting of scarcity induced decisionmaking coupled with innovative behavior. I develop a measurement model of catch-up innovation and empirically test the validity of the measurement model using a sample of Chinese multinational firms. The results support my theoretical conceptualization. In essay two, I focus on EMNEs' aggressive commercialization practices, a unique behavioral dimension of catch-up innovation. I propose a model to explain how aggressive commercialization is influenced by institutional support factors (i.e., government encouragement and knowledge from research institutions) and resource constraints (i.e., lack of innovation capability, lack of brand equity, and lack of time). I also consider how aggressive commercialization influences EMNEs' product output performance. Additionally, I explore two sets of moderating factors, task-related capabilities and environment-related capabilities, in order to study the relationship between aggressive commercialization and product output performance. Findings from a sample of Chinese multinational firms support a majority of my hypotheses

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