WHAT DRIVES AIRLINES TO MAKE A CROSS-BORDER INVESTMENT? FIRM-LEVEL FACTORS AND INSTITUTIONAL FACTORS

The purpose of this research is to identify the determinants of cross-border investment in the airline industry, focusing on the intangible assets and resources which airlines possess and the institutional differences between home and host countries. The empirical results indicate that airlines have fewer incentives for making foreign investment in other airlines in institutionally different countries and culturally different countries. Furthermore, government restriction on foreign ownership in the host country may discourage airlines to pursue investment in such country. The results weakly support a hypothesis that the more intangible assets airlines possess, the more they may be induced to make FDI. We interpreted the results as follows: the FDI decision of the airline industry may be accounted for by Dunning’s Eclectic Paradigm model just as other industries may be; the institutional difference may have an overwhelming impact on airlines for their FDI decisions; and further studies may be necessary in scrutinizing the role of intangible assets of airlines.

The impact of institutional difference on Vietnamese firms’ export intensity: The role of international experience

Institutional theory and most previous studies assume that institutional difference between home and host countries is negatively related to firm’s performance in foreign market (including firm’s export intensity). Extending this assumption, we hypothesize that international experience is likely to moderate the negative effect of institutional distance on firm’s export intensity. Survey data from World Bank on 305 Vietnamese firms were used to test the proposed hypotheses. Both Tobit and OLS regressions reveal that with controlling characteristics of firm, the negative effect of institutional difference on export intensity of firm with the low level of international experience is higher than on that with the high level of international experience. The study provides managerial implications to literature.