Wholly Owned Subsidiary Versus Technology Licensing in the Worldwide Chemical Industry

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

“…However, Brouthers and Brouthers (2001) showed that investment risk moderated this relationship such that as risk increases, higher cultural distance is related to preferences for wholly owned entry modes rather than JVs. Also, as cultural distance increased, Japanese firms were more likely to choose greenfields (Anand and Delios, 1997) or wholly owned subsidiaries (Padmanabhan and Cho, 1996) over shared ownership; the tendency to choose licensing over JVs or wholly owned subsidiaries increased (Kim and Hwang, 1992); the tendency to choose a greenfield over an acquisition increased (Harzing, 2002); wholly owned subsidiaries were less preferred than either shared-equity ventures (Barkema and Vermeulen, 1998;Hennart and Larimo, 1998) or technology licensing (Arora and Fosfuri, 2000); the tendency to choose management-service contracts over franchising increased (Erramilli et al, 2002); a greater proportion of incentive-based compensation was used for subsidiary managers of host-country foreign affiliates (Roth and O'Donnell, 1996); equity JV partners were more likely to acquire an equal or majority (rather than minority) share (Pan, 1996;Erramilli et al, 1997); greater structural changes in alliance and contracts took place (Kashlak et al, 1998); firms engaged in less R&D (Richards and De Carolis, 2003); and a greater number of TMTs departed from US companies acquired by foreign firms (Krug and Nigh, 1998).…”

Do We Need to Distance Ourselves from the Distance Concept? Why Home and Host Country Context Might Matter More Than (Cultural) Distance

“…So in terms of cultural distance this is effectively a single home country study that is likely to show the effect of differences in host country contexts, such as investment restrictions in Asian countries, rather than the effect of cultural distance. Another study (Arora and Fosfuri 2000) includes only three home countries/regions with two thirds of the sample composed of the US and Japan. Hence the results are likely to reflect 1 The studies that included one or more host country factors found insignificant results for the impact of cultural distance on entry mode choice.…”

New Trends in Foreign Market Entry Mode Choices: The Case of Italian Mid-Sized Companies

“…Some studies (Kogut and Zander, 1993;Arora and Fosfuri, 2000) have corroborated the expectation that the more imperfectly imitable the resources and capabilities are (tacit knowledge and embedded capabilities) the more firms favor equity modes (as opposed to non-equity ones, such as licensing and franchising)…”