Cultural Distance and Entry Modes in Emerging Markets: Empirical Evidence in Vietnam

Hà, Nguyễn Minh; Binh, Quan Minh Quoc; Dang, Pham Phi

doi:10.3390/jrfm13010014

Cited by 8 publications

(5 citation statements)

References 33 publications

(67 reference statements)

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“…This result was consistent with those of the studies by [32,60], who argued that a considerable cultural distance would result in an increase in prices and costs associated with contracting, negotiation, and monitoring and would create more risks, which in turn would encourage MNEs to choose JVE. However, this result contradicts the research conclusion of [61], who found a positive impact of cultural distance on WOE choice in Vietnam. Agriculture is a traditional field in Vietnam with long-standing customs and farming practices and where attention is often paid to experience and habits.…”

Section: Discussioncontrasting

confidence: 96%

Country Distance and Entry Mode Choice of MNEs in Vietnam’s Agricultural Sector in Context of Free Trade

Nguyen

Tran

2022

Sustainability

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In this article, we focus on tackling a relative research gap: how country distance (institutional, cultural, economic, and geographical distance) determines the entry mode choice between wholly-owned enterprises (WOEs) and joint venture enterprises (JVEs) in the context of “going global”. Based on a sample of 439 multinational enterprises (MNEs) from 22 different nations that directly invested in the agricultural sector of Vietnam in the period 1996–2019, an empirical investigation has been conducted by employing logistic regression. The results show that as cultural and geographical distances increase, MNEs prefer JVE forms. However, WOE becomes more popular in cases of large economic and institutional distance. Furthermore, entry mode choices of MNEs are also noticeably impacted by freedom of trade.

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Section: Discussioncontrasting

confidence: 96%

Country Distance and Entry Mode Choice of MNEs in Vietnam’s Agricultural Sector in Context of Free Trade

Nguyen

Tran

2022

Sustainability

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“…High transactional costs encourage EMFs to safeguard their assets from the opportunistic behaviors of their partners (Brouthers and Brouthers, 2001). For example, when the cultural differences between Vietnam and their respective home countries are enormous, foreign investing firms prefer WOSs over JVs to operate independently and avoid the risk of uncertainty (Ha et al. , 2020).…”

Section: Theory and Hypothesis Developmentmentioning

confidence: 99%

Strategic asset-seeking foreign direct investments by emerging market firms: the role of institutional distance

Yang

Allen

et al. 2022

IJOEM

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PurposeThis study examines the impact of formal and informal institutional distances on the foreign ownership strategies of emerging market firms (EMFs).Design/methodology/approachThis is an empirical study relying on two sets of data collected over two time periods, 2006–2008 and 2017–2019, for publicly-listed Chinese companies.FindingsGreater formal institutional distances in the host and home countries make EMFs less likely to use joint ventures (JVs), while greater informal distances make EMFs more likely to use the JVs. When both formal and informal institutional distances are high, the use of JVs is more likely. These results are affected by the goal of the foreign direct investment (FDI) project, with strategic asset-seeking (SAS) FDI projects favoring the use of wholly owned subsidiaries (WOSs).Research limitations/implicationsThis study relies on cross-sectional data from publicly-listed Chinese companies, which may limit the generalizability of the findings.Practical implicationsEMFs investing in advanced countries should carefully assess the tradeoffs between transactional cost efficiency and legitimacy in making their foreign ownership decisions. If the goal is to access strategic assets, EMFs should consider WOSs to ensure the transfer of strategic assets and create value for the parent company.Originality/valueThe findings show that formal and informal distances between institutions have different impacts on foreign ownership strategies, providing empirical evidence for the need to balance conflicting cost-efficiency and legitimacy considerations when businesses make such strategic decisions. The authors show how this balance depends on the goal of the FDI project.

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“…Cultural distance, as measured by Hofstede's dimensions, influences market entry decisions, with higher cultural distance reducing the likelihood of international market entry (Rothaermel et al, 2006). It also affects the choice of entry modes in emerging markets and influences the success of market entry in small emerging markets (Ha et al, 2020;Gollnhofer & Turkina, 2015;Alexander et al, 2007). Additionally, cultural congruence can strengthen the internal marketing and employee satisfaction relationship, impacting market selection decisions (Huang & Rundle-Thiele, 2014).…”

Section: Cultural Distancementioning

confidence: 99%

International Market Selection for Frozen Shrimp Exports From Thailand: An Integration of Cage Distance Framework and Data Envelopment Analysis

Inkaew,

Phokawattana

2024

GBAFR

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Purpose – This research aims to assess and rank the efficiency of countries where Thailand exported frozen shrimp to, and to provide actionable insights for policymakers and stakeholders in the frozen shrimp export industry based on the efficiency scores.Methodology – This study employed the integration of the CAGE Distance Framework and Data Envelopment Analysis (DEA) to investigate the dynamics of international market selection for frozen shrimp exports from Thailand. The study evaluated and ranked the effectiveness of 20 nations that were chosen based on 2022 export values exceeding 1,000,000 US Dollars. The DEA BCC model, utilizing linear programming techniques, categorized these countries as Decision Making Units (DMUs), assessing their efficiency to determine how efficiently a DMU produced outputs given a set level of inputs.Results – Results from the DEA analysis highlighted efficiency leaders with an efficiency score of 1, such as China, the United States, Japan, Taiwan, Hong Kong SAR, Australia, Myanmar, Vietnam, Singapore, Cambodia, and Laos. Additionally, it identified intermediate performers with room for improvement and countries with opportunities for optimization.Implications – This integrated methodology served as a valuable guide for future students and professionals navigating the complexities of the global frozen shrimp trade.Originality/Value – The integration of the CAGE framework with DEA offered a unique approach that had not been explored in previous applications. It established a pioneering approach for policymakers, practitioners, and entrepreneurs.

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Cultural Distance and Entry Modes in Emerging Markets: Empirical Evidence in Vietnam

Cited by 8 publications

References 33 publications

Country Distance and Entry Mode Choice of MNEs in Vietnam’s Agricultural Sector in Context of Free Trade

Country Distance and Entry Mode Choice of MNEs in Vietnam’s Agricultural Sector in Context of Free Trade

Strategic asset-seeking foreign direct investments by emerging market firms: the role of institutional distance

International Market Selection for Frozen Shrimp Exports From Thailand: An Integration of Cage Distance Framework and Data Envelopment Analysis

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