Learning to Compete in a Transition Economy: Experience, Environment, and Performance

Luo, Yadong; Peng, Mike W.

doi:10.1057/palgrave.jibs.8490070

Cited by 679 publications

(562 citation statements)

References 67 publications

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“…In addition, as cultural distance increased, the amount of US foreign direct investment (FDI) decreased (Li and Guisinger, 1992;Loree and Guisinger, 1995); shareholder wealth in those firms making cross-border acquisitions decreased (Datta and Puia, 1995); foreign venture longevity decreased (Barkema et al, 1996), especially when JVs or acquisitions were considered ; the level of embeddedness and integration between host companies and affiliates decreased (Hakanson and Nobel, 2001); the degree of personal attachment in international cooperative ventures decreased (Luo, 2001a), as did the frequency of expressive ties in organizational networks (Manev and Stevenson, 2001); and the level of CEO role conflict and ambiguity (Gong et al, 2001), international expansion performance (Luo and Peng, 1999), local responsiveness (Luo, 2001b), subsidiary return on assets (Luo and Park, 2001), the payoffs from JV partner buyouts (Reuer, 2001), IJV sales (Luo, 2002), and the likelihood of success of foreign-owned affiliates in the US (Li and Guisinger, 1991) all decreased. Increasing cultural distance from the US was negatively associated with entrepreneurial traits such as internal locus of control, moderate risk-taking, and high energy level at the country level (Thomas and Mueller, 2000).…”

Section: Research Challengesmentioning

confidence: 99%

A quarter century of Culture's Consequences: a review of empirical research incorporating Hofstede's cultural values framework

2006

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Since Geert Hofstede's Culture's Consequences: International Differences in Work-Related Values (Sage, 1980) was published, researchers have utilized Hofstede's cultural values framework in a wide variety of empirical studies. We review 180 studies published in 40 business and psychology journals and two international annual volumes between 1980 and June 2002 to consolidate what is empirically verifiable about Hofstede's cultural values framework. We discuss limitations in the Hofstede-inspired research and make recommendations for researchers who use Hofstede's framework in the future. Journal of International Business Studies (2006) 37, 285–320. doi:10.1057/palgrave.jibs.8400202

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Section: Research Challengesmentioning

confidence: 99%

A quarter century of Culture's Consequences: a review of empirical research incorporating Hofstede's cultural values framework

2006

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“…While a firm's domestic experience allows it to develop a set of routines that can shorten the time that new members of foreign operations need to invest in learning their jobs, these routines alone are not likely to be sufficient because differences in culture, infra-structure, and institutions between home and international markets can create unprecedented managerial challenges that require a firm to adapt its routines and even develop new ones (Luo and Peng, 1999;Lord and Ranft, 2000). A firm with greater international experience prior to its entry into a foreign market is likely to have experienced more diverse opportunities that allow it to learn how to deal with local idiosyncratic requirements and how to maintain control and coordination within a network of culturally different and geographically dispersed foreign subsidiaries (Chang and Rosenzweig, 2001;Zahra, Ireland, and Hitt, 2000).…”

Section: International Expansion and The Penrose Effectmentioning

confidence: 99%

The dynamics of Japanese firm growth in U.S. Industries: The Penrose effect

Tan

Mahoney

2007

MANAGE. INT. REV.

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This research paper explores the conditions under which a firm is more/less likely to incur the Penrose Effect when expanding in a foreign market. We posit that multinational firms that can accelerate the development of new managerial resources in their foreign operations have greater organizational capabilities to adjust their managerial resources timely in the process of expansion, and thus will be less vulnerable to a severe managerial constraint on the rate of growth. In contrast, factors that impede the development of new managerial resources in foreign operations will prevent multinational firms from growing fast in consecutive time periods. Based on a longitudinal sample of Japanese manufacturing entries in the United States, our empirical results indicate that Japanese firms were able to achieve growth in consecutive time periods when these firms sent more expatriates to the foreign operations at the time of entry, and when these Japanese firms had greater home experience prior to their entry into the U.S. market. On the other hand, Japanese firms were found to be less able to achieve growth in consecutive time periods when a high level of uncertainty characterized the U.S. markets that these Japanese firms entered. AbstractThis research paper explores the conditions under which a firm is more/less likely to incur the Penrose Effect when expanding in a foreign market. We posit that multinational firms that can accelerate the development of new managerial resources in their foreign operations have greater organizational capabilities to adjust their managerial resources timely in the process of expansion, and thus will be less vulnerable to a severe managerial constraint on the rate of growth. In contrast, factors that impede the development of new managerial resources in foreign operations will prevent multinational firms from growing fast in consecutive time periods. Based on a longitudinal sample of Japanese manufacturing entries in the United States, our empirical results indicate that Japanese firms were able to achieve growth in consecutive time periods when these firms sent more expatriates to the foreign operations at the time of entry, and when these Japanese firms had greater home experience prior to their entry into the U.S. market. On the other hand, Japanese firms were found to be less able to achieve growth in consecutive time periods when a high level of uncertainty characterized the U.S. markets that these Japanese firms entered.

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“…Foreign enterprises in transition economies such as China (Luo & Peng, 1999) represent a prime example of a practical setting in which macro-level developments of societal transformation and globalization affect micro-level practices of internationalization and the management of firms in foreign countries in the midst of major changes (Boisot & Child, 1996;Tsui, Schoonhoven, Meyer, Lau, & Milkovich, 2004). Managers are bound to feel more vulnerable in such contexts.…”

Section: Introductionmentioning

confidence: 99%

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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Learning to Compete in a Transition Economy: Experience, Environment, and Performance

Cited by 679 publications

References 67 publications

A quarter century of Culture's Consequences: a review of empirical research incorporating Hofstede's cultural values framework

A quarter century of Culture's Consequences: a review of empirical research incorporating Hofstede's cultural values framework

The dynamics of Japanese firm growth in U.S. Industries: The Penrose effect

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

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