Japanese Investors' Choice of Joint Ventures Versus Wholly-owned Subsidiaries in the US: The Role of Market Barriers and Firm Capabilities

Chen, Shih-Fen S.; Hennart, Jean‐François

doi:10.1057/palgrave.jibs.8491002

Cited by 158 publications

(101 citation statements)

References 27 publications

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“…Other than technological environments, our analysis sheds lights on the market environments that shape the perceived vulnerability of foreign managers. Unlike most authors on international business, who focus on the entry barriers to foreign enterprises in their expansion into host economies (Chen & Hennart, 2002), we found that it is the level of entry barriers to the industry (in which a foreign enterprise is operating) encountered by the local competitors that shapes the degree of perceived vulnerability of its foreign managers. Moreover, we argue that the level of dependence on local markets also matters.…”

Section: Theoretical Contributionscontrasting

confidence: 79%

Wary managers: Unfavorable environments, perceived vulnerability, and the development of trust in foreign enterprises in China

Tsui‐Auch

Möllering

2009

J Int Bus Stud

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Vulnerability is salient among international managers, who tend to be wary when operating in transition economies like China. Systematic research is lacking, though, on how the local environment influences foreign managers' perception of vulnerability, and how foreign managers can develop trust even when their perceived vulnerability is high. We conducted in-depth case studies of two foreign-controlled enterprises in China, and developed a theoretical model that links perceptions of the macro-level environment to micro-level management. Our results illustrate the antecedents and consequences of perceived vulnerability and the processes of trust building in unfavorable environments. Through comparative analysis of the two cases, we found that the foreign managers' perceived vulnerability was shaped by the institutional, technological, and market conditions of the local environment, and we learned how this perceived vulnerability influenced their trust in the local workforce and the joint investment in formal and social control they used in building trust. The effect of perceived vulnerability on trust was moderated over time when the implementation of control was combined with active investments in trust, which led to behavioral changes on the part of the local employees, which in turn increased their trustworthiness. The implications of these findings are discussed.

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Section: Theoretical Contributionscontrasting

confidence: 79%

Wary managers: Unfavorable environments, perceived vulnerability, and the development of trust in foreign enterprises in China

Tsui‐Auch

Möllering

2009

J Int Bus Stud

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“…The logit regression model is widely used in entry mode literature and channel selection literature; see, among others, Kim and Hwang (1992), Agarwal and Ramaswami (1992), Li (1995), and Chen and Hennart (2002). We use 89 cosmetics These results also support H5 and H6.…”

Section: Figure 1 Is Approximately Heresupporting

confidence: 67%

Regional multinationals and the Korean cosmetics industry

Rugman

2007

Asia Pacific J Manage

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This paper analyzes the market penetration and expansion strategy of cosmetics and toiletries multinational enterprises (MNEs) in South Korea from the perspective of regional strategy as developed recently by Rugman. We find that MNEs have different market entry and expansion strategies in the home region and in the foreign region. Home region MNEs (Japanese MNEs in this case), in general, utilize their firm-specific advantages (FSAs) better than foreign region MNEs (European and MNEs from the Americas in this case). Due to differences in transaction costs, home region MNEs exploit downstream FSAs while foreign region MNEs develop upstream FSAs. Market similarity also leads to a greater incentive to operate in the home region rather than in foreign regions. The home region effect significantly increases the likelihood of entry into foreign markets as the host country's "diamond" significantly affects the market entry strategies of MNEs.

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“…Partial acquisitions provide the possibility to reduce ambiguity (e.g. Eden and Miller 2004) especially because operating under different local rules may create problems with incorporating organizational structures, practices and strategies from the headquarters (Chen and Hennart 2002;Kostova and Roth 2002). Local ownership may ease some of the acquisition hurdles and speed up the negotiation process in emerging economies (Jakobsen and Meyer 2008), especially if the CB M&A involves restructuring, staff redundancies and job losses (Estrin et al 2009).…”

Section: Formal Institutional Distance and Ownership Strategies In Crmentioning

confidence: 99%

Influences of Institutional Distance and MNEs’ Host Country Experience on the Ownership Strategy in Cross-Border M&As in Emerging Economies

Arslan

Dikova

2015

Journal of Transnational Management

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ABTRACT:This paper analyzes ownership strategy in cross-border mergers and acquisitions (CB M&As) undertaken by the multinational enterprises (MNEs) in emerging economies. We use new institutional economics and organizational learning theories to hypothesize and empirically analyze the influence of formal and informal institutional distance, and MNEs' host country experience on the MNEs' choice between full and partial CB M&As. The empirical analysis is based on a sample of 184 CB M&As launched by MNEs in emerging economies. Our empirical results revealed that high formal and informal institutional distances lead to a preference for partial CB M&As however, MNEs' host country experience moderated the relationship between institutional distance and the MNEs' choice between full and partial CB M&As. We found that MNEs with prior investment experience in the focal emerging market opted for full CB M&As over partial CB M&As despite high formal and informal institutional differences.

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Japanese Investors' Choice of Joint Ventures Versus Wholly-owned Subsidiaries in the US: The Role of Market Barriers and Firm Capabilities

Cited by 158 publications

References 27 publications

Wary managers: Unfavorable environments, perceived vulnerability, and the development of trust in foreign enterprises in China

Wary managers: Unfavorable environments, perceived vulnerability, and the development of trust in foreign enterprises in China

Regional multinationals and the Korean cosmetics industry

Influences of Institutional Distance and MNEs’ Host Country Experience on the Ownership Strategy in Cross-Border M&As in Emerging Economies

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