Entry Mode Degree of Control, Firm Performance and Host Country Institutional Development: A Meta-Analysis

Giachetti, Claudio; Manzi, Giancarlo; Colapinto, Cinzia

doi:10.1007/s11575-018-0365-z

Cited by 25 publications

(30 citation statements)

References 83 publications

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“…There is a significant body of literature in International Business (IB) on entry modes, specifically the choice between different modes such as exports versus Foreign Direct Investments (FDI) (Ang et al, 2015;Giachetti et al, 2019;Hill et al, 1990). A large body of literature also exists on exporting strategies (Souchon et al, 2016;Krammer et al, 2018).…”

Section: Introductionmentioning

confidence: 99%

Home country institutional impact on the choice of direct vs indirect exports: an emerging markets perspective

Elango

Pangarkar

2020

IMR

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PurposeThis study uses the notions of institutional harshness and uncertainty avoidance in the home country to explain the choice between direct and indirect exporting strategies by emerging market firms.Design/methodology/approachThis study is based on a dataset of 23,256 observations on firms from 32 countries spread over 11 years (2006–2016). Since only some firms undertake exports, the Heckman procedure is used to control for sample self-selection. In the first stage, we predict which firms will choose to export, and, in the second stage, we examine the factors driving the choice made by firms involved in exports between direct and indirect exports strategies.FindingsThe analyses reveal that firms are more likely to choose direct exports when institutional harshness is high and when they are from countries with low uncertainty avoidance. We also find that the strength of the relationship between institutional harshness and the choice of direct exports is moderated at high levels of uncertainty avoidance.Research limitations/implicationsWhile this study's empirical models account for many firm-level factors as well as home country differences discussed in the literature, we acknowledge there could be other temporal, firm or country idiosyncratic factors not included in our analysis driving the key choices examined in the paper.Originality/valueThis study makes three contributions to exporting literature. First, it highlights the drivers of the choice between direct and indirect exports. This choice is an important facet of exporting strategy and has received scant attention in prior IB research. Second, it demonstrates how the choice between direct and indirect exports is impacted by the degree of the home country's institutional harshness and uncertainty avoidance. Third, it offers insights on how the interaction of formal and informal home market institutional factors influences export strategy.

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Section: Introductionmentioning

confidence: 99%

Home country institutional impact on the choice of direct vs indirect exports: an emerging markets perspective

Elango

Pangarkar

2020

IMR

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“…Authors who share similar outcomes with Giachetti et al (2019) and Onamusi (2020), included Awolusi (2013) and Brouthers (2013). Contrary to the findings established by Acheamponga and Kumahb (2012), Giachetti et al (2019), and Onamusi (2020), Hofer and Baba (2018) found that equity and non-equity strategies had positive and statistically significant effect on small and midsized enterprises' performance. Also, some studies could not find any link between non-equity and firm performance (Brouthers & Nakos, 2004;Hollender et al, 2017).…”

Section: Moderating Effect Of Organisational Structure and Environmental Turbulence On Entry Mode Strategy -Performance Linkagementioning

confidence: 56%

Entry Mode Strategy and Firm Performance in Emerging Economy: Moderating Role of Organisational Structure and Environmental Turbulence

Onamusi

2021

Manage: J. Sustainable Bus. Manage, Solutions Emerging Econ.

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Research question: This study assessed the combined moderating effect of organizational structure and environmental turbulence on entry mode strategy - performance link focusing on baby care industry in Lagos State, Nigeria. Motivation: The manufacturers of baby care products in Nigeria have struggled to understand the complexities of entry mode strategy and how to use firm-specific capabilities to contain the threats from new entrants given the idiosyncrasies of the business environment in Nigeria. Also, considering the fast changing business environment and the need for firms to align internal organisational structure to manage the external environmental challenges, this study via the supposition of Hage (1965) axiomatic theory of organisations examined the joint moderating effect of organisational structure and environmental turbulence on entry mode strategy - performance linkage focusing on the baby care industry in Lagos State, Nigeria. Idea: Empirical submissions on the combined moderating effect of organizational structure and environmental turbulence on the interactions of entry mode strategy and organizational performance are sparse. Hence, this study addressed this gap in literature. Data: The survey research design and a sample of 518 employees engaged in FMCG manufacturers in Lagos State, Nigeria were adopted for this study. Tools: A validated structured questionnaire was the instrument of data collection for this study and the hierarchical regression analysis was adopted to test the hypotheses formulated. Findings: The results showed that the interaction between entry mode strategy and firm performance was positive and significant. Further analysis revealed that the interaction term of organizational structure and environmental turbulence accounted for the rise in firm performance to suggest that organizational structure and environmental turbulence are joint significant moderators. This suggests that entry mode strategy appropriateness is key to firm performance and that the fit between organisational structure and the macro-environment is a precondition to higher performance. Contribution: This study adds to recent empirical literature on the link between entry mode strategy, organizational structure, environmental turbulence, and firm performance within emerging economy context, and it provides additional support for the assumptions of the eclectic theory and Hage’s axiomatic theory of organization.

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“…In what follows, we examine how a firm's decision to increase resource commitment in terms of control over its entry mode in an emerging market changes depending on the level of institutional voids experienced by the firm in that market. Our argument is based on previous authors' observation that firms are exposed to two simultaneous forces when entering emerging countries: the need to mitigate both behavioral and environmental uncertainty (Giachetti et al, 2019).…”

Section: Institutional Voids In Emerging Markets and Firms' Entry Modmentioning

confidence: 99%

“…Zhao et al, 2004). Recent literature reviews of entry mode studies (Giachetti et al, 2019) have observed that, despite institutional voids in a firm's host country bring both behavioral and environmental uncertainties (Khanna & Palepu, 2010), transaction cost theory offers different perspectives about the type of control a firm's entry modes should have to cope with these uncertainties. Authors suggest that in the presence of behavioral uncertainty, firms should use high-control entry modes to avoid foreign partners' opportunism (Gatignon & Anderson, 1988), while in the presence of environmental uncertainty, firms should use low-control entry modes to retain the strategic flexibility necessary to rapidly withdraw assets from the host country if the situation so dictates (Brouthers & Nakos, 2004).…”

Section: Behavioral and Environmental Uncertainty In Emerging Marketsmentioning

confidence: 99%

How much control do firms exercise over their resources when entering emerging markets? The influence of institutional voids on entry mode degree of control

Giachetti

Peprah

2020

BRQ Business Research Quarterly

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The international management literature has presented inconclusive results about the effect of institutional voids in a host country on entrant firms’ resource commitment. With the lens of institutional theory and transaction cost theory, this article examines how institutional voids in an emerging market influence a firm’s decision to move resources in that market. Resource commitment in an emerging market is examined in terms of the degree of control of the entry strategy employed. The theory presented argues that as institutional voids in a firm’s host country escalate, the firm sets out different priority actions to mitigate behavioral and environmental uncertainties in the host country, that in turn affect the degree of control of its entry modes. By relying on a sample of 90 Italian firms operating in China between 2001 and 2010, the results support the hypothesis that the institutional voids–entry mode degree of control relationship displays an inverted U-shape. JEL CLASSIFICATION F23; L1

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Entry Mode Degree of Control, Firm Performance and Host Country Institutional Development: A Meta-Analysis

Cited by 25 publications

References 83 publications

Home country institutional impact on the choice of direct vs indirect exports: an emerging markets perspective

Home country institutional impact on the choice of direct vs indirect exports: an emerging markets perspective

Entry Mode Strategy and Firm Performance in Emerging Economy: Moderating Role of Organisational Structure and Environmental Turbulence

How much control do firms exercise over their resources when entering emerging markets? The influence of institutional voids on entry mode degree of control

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