Institutional distance has been known to be an important driver of Multinational Enterprises' strategies and performance in host countries. Based on a large panel dataset of 10,562 firms operating in 17 emerging markets and spanning 80 home countries, we re-examine the relationship described by Gaur and Lu (J Manage 33 (1): 2007) between regulatory institutional distance and subsidiary performance. We extend this research by (1) examining this relationship in the context of emerging markets, (2) examining the moderating effects of ownership strategy and host-country experience within the context of emerging markets and (3) accounting for a greater variety of institutions by including a large number of home and host countries. We find that institutional distance negatively affects subsidiary performance in emerging markets. Our findings also show that the negative effects of institutional distance on subsidiary performance are lesser for subsidiaries with partial ownership (than for subsidiaries with full ownership) and for subsidiaries with greater host-country experience. We discuss our findings with respect to Gaur and Lu's model, which explores the relationships between these variables in a general context.
The Kogut and Singh (J Int Bus Stud 19(3):411-432, 1988) index is the most widely used construct to measure cultural distance in international business and management research. We show that this index is incorrectly specified and captures the squared cultural distance. This inaccuracy is problematic because it means that the empirical findings on the effects of cultural distance presented in different strands of international business research are likely to be misleading. We specify the correct form of the distance measure based on the Euclidean distance formula and demonstrate the implications of using the incorrectly specified Kogut and Singh (1988) index.
Using a multi-stage research design and insights from organizational learning theory, we investigate how experience in R&D collaboration with different types of domestic and foreign partners (customers, suppliers, competitors) influences the formation of new R&D collaborations with foreign partners, and how such collaborations in turn affect firms' innovative performance. Our framework, which is tested against a sample of 8800 firms over a 9-year period, explains how experience with certain types of domestic partners helps firms establish foreign collaborations, particularly with the same partner types. It further explains why experience in foreign collaborations is more important for the formation of new collaborations abroad in relation to experience with domestic partner types. Moreover, it shows that collaborations with foreign partners are more beneficial than domestic collaborations for a firm's innovative performance and identifies which types of foreign R&D partnerships are more advantageous for enhancing innovation performance. Finally, it demonstrates that the performance-enhancing advantages of foreign partnerships are not equal for all firms but are dependent on certain dimensions of absorptive capacity. The effect that foreign suppliers have on a firm's innovative performance is further enhanced if a firm has adopted appropriate organizational practices designed to enhance external collaboration and the internal dissemination of external knowledge. Finally, firms gain more from foreign competitors if they possess high levels of employee skills.
Despite the increased number of studies of the internationalization of emerging-market multinationals (EMNCs), Latin American and Asian firms have dominated the focus of such studies, while the study of the internationalization process of sub-Saharan African firms in the international business literature is quite limited. Therefore, this article examines the motivations and location patterns of the internationalization process of four Nigerian firms through a multiple case study approach. The findings show that the internationalization of the Nigerian firms is a recent phenomenon, but the foreign investment pattern reflects a pan-African investment strategy. However, the findings also reveal that the firm-specific advantages that had been accumulated in the domestic market, coupled with home-country factors and regional-/hostmarket factors, were key determinants of the motivations and location patterns in the internationalization process of Nigerian firms.
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