Interdependent behavior in foreign direct investment: The multi-level effects of prior entry and prior exit on foreign market entry

Journal of International Business Studies

Volumn 37, Issue 5, 2006, Pages 642-665

  Chan, Christine M ^a   Makino, Shige ^b   Isobe, Takehiko ^c  

^a UNIVERSITY OF HONG KONG   (Hong Kong)

^b CHINESE UNIVERSITY OF HONG KONG   (Hong Kong)

^c KOBE UNIVERSITY   (Japan)

Author keywords

Interdependent behavior in foreign market entry; Legitimacy and competition in external and internal environments; Multi level analysis; Prior entry and prior exit decisions as a signal to potential entrants

Indexed keywords

EID: 33747659644     PISSN: 00472506     EISSN: 14786990     Source Type: Journal    
DOI: None     Document Type: Article

References (141)

1. Abrahamson, E. and Rosenkopf, L. (1993) 'Institutional and competitive bandwagons: using mathematical modeling as a tool to explore innovation diffusion', Academy of Management Review 18(3): 487-517.
2. Ahlstrom, D. and Bruton, G.D. (2001) 'Learning from successful local private firms in China: establishing legitimacy', Academy of Management Executive 15(4): 72-83.
3. Aldrich, H.E. (1979) Organizations and Environments, Prentice Hall: Englewood Cliffs, NJ.
4. Aldrich, H.E. and Fiol, C.M. (1994) 'Fools rush in? The institutional context of industry creation', Academy of Management Review 19(4): 645-670.
5. Allison, P.D. (1995) Survival Analysis Using the SAS System: A Practical Guide, SAS Institute Inc.: Cary, NC.
6. Allison, P.D. (1999) Logistic Regression Using the SAS System: Theory and Application, SAS Institute Inc.: Cary, NC.
7. Amburgey, T.L. and Miner, A.S. (1992) 'Strategic momentum: the effects of repetitive, positional, and contextual momentum on merger activity', Strategic Management Journal 13(5): 335-348.
8. Ang, S. and Cummings, L.L. (1997) 'Strategic response to institutional influences on information systems outsourcing', Organization Science 8(3): 235-256.
9. Aoki, M. (2001) Toward a Comparative Institutional Analysis, MIT Press: Cambridge, MA.
10. Ashforth, B.E. and Fried, Y. (1988) 'The mindlessness of organizational behaviors', Human Relations 41(4): 305-329.
11. Bain, J.S. (1959) Industrial Organization, Wiley: New York.
12. Barkema, H.C., Bell, J.H.J. and Pennings, J.M. (1996) 'Foreign entry, cultural barriers, and learning', Strategic Management Journal 17(2): 151-166.
13. Barley, S.R. (1986) 'Technology as an occasion for structuring: evidence from observations of CT Scanners and the social order of radiology departments', Administrative Science Quarterly 31(1): 78-108.
14. Bartholomew, S. (1997) 'National systems of biotechnology innovation: complex interdependence in the global system', Journal of International Business Studies 28(2): 241-266.
15. Baum, J.A.C. and Oliver, C. (1996) 'Toward an institutional ecology of organizational founding', Academy of Management Journal 39(5): 1378-1427.
16. Baum, I.A.C. and Singh, J.V. (1994) 'Organizational niches and the dynamics of organizational founding', Organization Science 5(4): 483-501.
17. Berger, P.L. and Luckmann, T. (1967) The Social Construction of Reality, Doubleday Anchor: New York.
18. Bigelow, L.S., Carroll, C.R., Seidel, M.D.L. and Tsai, L. (1997) 'Legitimation, geographical scale, and organizational density: regional patterns of foundings of American automobile producers, 1885-1981', Social Science Research 26(4): 377-398.
19. Biggart, N.W. and Guillén, M.F. (1999) 'Developing difference: social organization and the rise of the auto industries of South Korea, Taiwan, Spain and Argentina', American Sociological Review 64(October): 722-747.
20. Buckley, P.J. and Casson, M. (1976) The Future of the Multinational Enterprise, Macmillan: London.
21. Burns, L.R. and Wholey, D.R. (1993) 'Adoption and abandonment of matrix management programs: effects of organizational characteristics and interorganizational networks', Academy of Management Journal 36(1): 106-1 38.
22. Campbell, J.L. and Lindberg, L.N. (1990) 'Property rights and the organization of economic activity by the state', American Sociological Review 55(5): 634-647.
23. Carroll, G.R. and Hannan, M.T. (1989) 'Density dependence in the evolution of populations of newspaper organizations', American Sociological Review 54(4): 524-548.
24. Carroll, G.R., Preisendoerfer, P., Swaminathan, A. and Wiedenmayer, G. (1993) 'Brewery and brauerei: the organizational ecology of brewing', Organization Studies 14(2): 155-188.
25. Carroll, G.R. and Wade, J.B. (1991) 'Density dependence in the organizational evolution of the American brewing industry across different levels of analysis', Social Science Research 20(3): 21 7-302.
26. Casson, M.C. (1982) 'Transaction costs and the theory of the multinational enterprise', in A.M. Rugman (ed.) New Theories of the Multinational Enterprise, London: Croom Helm, pp: 24-43.
27. Caves, R.E. (1996) Multinational Enterprise and Economic Analysis, Cambridge University Press: Cambridge, MA.
28. Caves, R.E. and Mehra, S.K. (1986) 'Entry of Foreign multinationals into US manufacturing industries', in M.E. Porter (ed.) Competition in Global Industries, Harvard University Press: Boston, MA, pp: 449-481.
29. Chan, C.M. and Makino, S. (2002) 'Interorganizational imitation and Foreign ownership strategy', in F.). Contractor and P. Lorange (eds.) Cooperative Strategies and Alliances, Elsevier Science: Oxford, pp: 213-236.
30. Chang, S.J. (1995) 'International expansion strategy of Japanese firms: capability building through sequential entry', Academy of Management Journal 38(2): 383-407.
31. Cole, R.E. (1989) Strategies for Learning: Small-Croup Activities in American, Japanese, and Swedish Industry, University of California Press: Berkeley, CA.
32. Coviello, N.E. and McAuley, A. (1999) 'Internationalisation and the smaller firm: a review of contemporary empirical research', Management International Review 39(3): 223-256.
33. Davis, P.S., Desai, A.B. and Francis, J.D. (2000) 'Mode of international entry: an isomorphism perspective', Journal of International Business Studies 31(2): 239-258.
34. Delacroix, J. (1993) The European subsidiaries of American multinationals: an exercise in ecological analysis', in S. Ghoshal and D.E. Westney (eds.) Organization Theory and the Multinational Corporation, St Martin's Press: New York, pp: 105-135.
35. Delacroix, J. and Carroll, G.R. (1983) 'Organizational foundings: an ecological study of the newspaper industries of Argentina and Ireland', Administrative Science Quarterly 28(2): 274-291.
36. Delacroix, J., Swaminathan, A. and Solt, M.E. (1989) 'Density dependence vs population dynamics: an ecological study of failings in the California wine industry', American Sociological Review 54(April): 245-262.
37. DiMaggio, P.J. and Powell, W.W. (1983) 'The iron cage revisited: institutional isomorphism and collective rationality in organizational fields', American Sociological Review 48(April): 147-160.
38. Dobbin, F.R. (1994) Forging Industrial Policy: The United States, Britain, and France in the Railway Age, Cambridge University Press: Cambridge, UK.
39. Dobrev, S.D. (2001) 'Revisiting organizational legitimation: cognitive diffusion and sociopolitical factors in the evolution of Bulgarian newspaper enterprises, 1846-1992', Organization Studies 22(3): 419-444.
40. Dunning, J.H. (1988) 'The eclectic paradigm of international production: a restatement and some possible extensions', Journal of International Business Studies 19(Spring): 1-31.
41. Dunning, J.H. (1995) 'Reappraising the eclectic paradigm in an age of alliance capitalism', Journal of International Business Studies 26(3): 461-491.
42. Fligstein, N. (1990) The Transformation of Corporate Control, Harvard University Press: Cambridge, MA.
43. Florida, R. (1997) 'The globalization of R&D: results of a survey of foreign-affiliated R&D laboratories in the USA', Research Policy 26(1): 85-103.
44. Flowers, E.B. (1976) 'Oligopolistic reactions in European and Canadian direct investment in the United States', Journal of International Business Studies 7(Fall/Winter): 43-55.
45. Frank, D.J., Hironaka, A., Meyer, J.W., Schofer, E. and Tuma, N.B. (1999) 'The rationalization and organization of nature in world culture', in J. Boli and G.M. Thomas (eds.) Constructing World Culture: International Nongovernmental Organizations Since 1875, Stanford University Press: Stanford, CA, pp: 81-99.
46. Garcia-Pont, C. and Nohria, N. (2002) 'Local vs global mimetism: the dynamics of alliance formation in the automobile industry', Strategic Management Journal 23(4): 307-321.
47. Ghoshal, S. and Westney, D.E. (1993) Organization Theory and the Multinational Corporation, St Martin's Press: New York.
48. Graham, E.M. (1978) 'Transnational investment by multinational firms: a rivalistic phenomenon', Journal of Post Keynesian Economics 1(Fall): 82-99.
49. Granovetter, M. (1985) 'Economic action and social structure: the problem of embeddedness', American Journal of Sociology 91 (November): 481-510.
50. Greenwood, R. and Hinings, C.R. (1996) 'Understanding radical organizational change: bringing together the old and the new institutionalism', Academy of Management Review 21(4): 1022-1054.
51. Greve, H.R. (1996) 'Patterns of competition: the diffusion of a market position in radio broadcasting', Administrative Science Quarterly 41 (1): 29-60.
52. Greve, H.R. (2000) 'Market niche entry decisions: competition, learning, and strategy in Tokyo banking, 1894-1936', Academy of Management Journal 43(5): 816-836.
53. Greve, H.R. (2002) 'An ecological theory of spatial evolution: local density dependence in Tokyo banking, 1894-1936', Social Forces 80(3): 847-879.
54. Guillén, M.F. (1994) Models of Management: Work, Authority, and Organization in a Comparative Perspective, University of Chicago Press: Chicago.
55. Guillén, M.F. (2002) 'Structural Inertia, Imitation, and foreign expansion: South Korean firms and business groups in China, 1987-1995', Academy of Management Journal 45(3): 509-525.
56. Guillén, M.F. (2003) 'Experience, imitation, and the sequence of foreign entry: wholly owned and joint-venture manufacturing by South Korean firms and business groups in China, 1987-1995', Journal of International Business Studies 34(2): 185-198.
57. Gupta, A. and Govindarajan, V. (1991) 'Knowledge flows and the structure of control within multinational corporations', Academy of Management Review 16(4): 768-792.
58. Hannan, M.T. (1997) 'Inertia, density and the structure of organizational populations: entries in European automobile industries, 1886-1981', Organization Studies 18(2): 193-228.
59. Hannan, M.T. and Carroll, G.R. (1992) Dynamics of Organizational Populations: Density, Legitimation, and Competition, Oxford University Press: New York.
60. Hannan, M.T. and Freeman, J. (1989) Organizational Ecology, Harvard University Press: Cambridge, MA.
61. Hannan, M.T., Carroll, G.R., Dundon, E.A. and Torres, J.C. (1995) 'Organizational evolution in a multinational context: entries of automobile manufacturers in Belgium, Britain, France, Germany, and Italy', American Sociological Review 60(August): 509-528.
62. Haunschild, P.R. and Miner, A.S. (1997) 'Modes of interorganizational imitation: the effects of outcome salience and uncertainty', Administrative Science Quarterly 42(3): 472-500.
63. Haveman, H.A. (1993) 'Follow the leader: mimetic isomorphism and entry into new markets', Administrative Science Quarterly 38(4): 593-627.
64. Hawawini, G., Subramanian, V. and Verdin, P. (2004) 'The home country in the age of globalization: how much does it matter for firm performance?' Journal of World Business 39(2): 121-135.
65. Henisz, W.J. (2000a) 'The institutional environment for economic growth', Economics and Politics 12(1): 1-31.
66. Henisz, W.J. (2000b) 'The institutional environment for multinational investment', Journal of Law, Economics, and Organization 16(2): 334-364.
67. Henisz, W.J. and Delios, A. (2001) 'Uncertainty, imitation, and plant location: Japanese multinational corporations, 1990-1996', Administrative Science Quarterly 46(3): 443-475.
68. Hennart, J.-F. (1982) The Theory of the Multinational Enterprise, University Michigan Press: Ann Arbor.
69. Hennart, J.-F. (1991) 'The transaction costs theory of joint ventures: an empirical study of Japanese subsidiaries in the United States', Management Science 37(4): 483-497.
70. Hennart, J.-F. and Park, Y.R. (1994) 'Location, governance, and strategic determinants of Japanese manufacturing investment in the United States', Strategic Management Journal 15(6): 419-436.
71. Hymer, S.H. (1976) The International Operations of National Firms: A Study of Direct Foreign Investment, MIT Press: Cambridge, MA.
72. Isobe, T., Makino, S. and Montgomery, D.B. (2000) 'Resource commitment, entry timing, and market performance of foreign direct investments in emerging economies: the case of Japanese international joint ventures in China', Academy of Management Journal 43(3): 468-484.
73. Johanson, J. and Vahlne, J.-E. (1977) 'The internationalization process of the firm: a model of knowledge development and increasing foreign market commitments', Journal of International Business Studies 8(Spring/Summer): 22-32.
74. Kelly, D. and Amburgey, T.L. (1991) 'Organizational inertia and momentum: a dynamic model of strategic change', Academy of Management Journal 34(3): 591-612.
75. Kilduff, M. (1993) 'The reproduction of inertia in multinational corporations', in S. Ghoshal and D.E. Westney (eds.) Organization Theory and the Multinational Corporation, St Martin's Press: New York, pp: 259-274.
76. Knickerbocker, F.T. (1973) Oligopolistic Reaction and Multinational Enterprise, Graduate School of Business Administration, Harvard University: Boston, MA.
77. Kogut, B. (1983) 'Foreign direct investment as a sequential process', in C. Kindleberger and D. Audretsch (eds.) The Multinational Corporation in the 1980s, MIT Press: Cambridge, MA, pp: 38-56.
78. Kogut, B. (1991) 'Country capabilities and the permeability of borders', Strategic Management Journal 12(Summer Special Issue): 33-47.
79. Kogut, B. and Chang, S.J. (1991) 'Technological capabilities and Japanese Foreign direct investment in the United States', Review of Economics and Statistics 73(3): 401-41 3.
80. Koh, J., Loh, L. and Venkatraman, N. (1990) 'Joint venture formation as an administrative innovation in the information technology sector: a diffusion perspective', working paper no. 3213-90-BPS, MIT Sloan School of Management.
81. Koopmans, T.C. (1957) Three Essays on the State of Economic Science, McGraw-Hill: New York.
82. Kostova, T. and Roth, K. (2002) 'Adoption of an organizational practice by subsidiaries of multinational corporations: institutional and relational effects', Academy of Management Journal 45(1): 215-233.
83. Kostova, T. and Zaheer, S. (1999) 'Organizational legitimacy under conditions of complexity: the case of the multinational enterprise', Academy of Management Review 24(1): 64-81.
84. Kuemmerle, W. (1999) 'The drivers of Foreign direct investment into research and development: an empirical investigation', Journal of International Business Studies 30(1): 1-24.
85. Lomi, A. (2000) 'Density dependence and spatial duality in organizational founding rates: danish commercial banks, 1846-1989', Organization Science 21(2): 433-461.
86. Lomi, A. (1995) 'The population ecology of organizational founding: location dependence and unobserved heterogeneity', Administrative Science Quarterly 40(1): 111-144.
87. Long, J.S. and Freese, J. (2003) Regression Models for Categorical Dependent Variables Using STATA, STATA Press: College Station, TX.
88. Lu, J.W. (2002) 'Intra- and inter-organizational imitative behavior: institutional influences on Japanese firms', Entry Mode Choice', Journal of International Business Studies 33(1): 19-37.
89. Lu, J.W. and Beamish, P.W. (2001) 'The internationalization and performance of SMEs', Strategic Management Journal 22(6-7): 565-586.
90. Mahmood, I.P. and Rufin, C. (2005) 'Government's Dilemma: the role of Government in imitation and innovation', Academy of Management Review 30(2): 338-360.
91. Makino, S. and Beamish, P.W. (1998) 'Performance and survival of joint ventures with non-conventional ownership structures', Journal of International Business Studies 29(4): 797-818.
92. Makino, S., Isobe, T. and Chan, C.M. (2004) 'Does country matter?' Strategic Management Journal 25(10): 1027-1043.
93. Martin, X., Swaminathan, A. and Mitchell, W. (1998) 'Organizational evolution in the interorganizational environment: incentives and constraints on international expansion strategy', Administrative Science Quarterly 43(3): 566-601.
94. McKendrick, D.G. (2001) 'Global strategy and population-level learning: the case of hard disk drives', Strategic Management Journal 22(4): 307-334.
95. Messallam, A.A. (1998) 'the organizational ecology of investment firms in Egypt: organizational founding', Organization Studies 19(1): 23-46.
96. Meyer, J.W. and Rowan, B. (1977) 'Institutionalized organizations: formal structure as myth and ceremony', American Journal of Sociology 83(2): 340-363.
97. Meyer, M.W. and Zucker, L.G. (1989) Permanently Failing Organizations, Sage Publications: Newbury Park, CA.
98. Mitchell, W., Shaver, J.M. and Yeung, B. (1992) 'Getting there in a global industry: impacts on performance of changing international presence', Strategic Management Journal 13(6): 419-432.
99. Mitchell, W., Shaver, J.M. and Yeung, B. (1994) 'Foreign entrant survival and Foreign market share: Canadian companies' experience in United States medical sector markets', Strategic Management Journal 15(7): 555-567.
100. Murtha, T.P. and Lenway, S.A. (1994) 'Country capabilities and the strategic state: how national political institutions affect multinational corporations', Strategies', Strategic Management Journal 15(summer special issue): 113-129.
101. North, D.C. (1990) Institutions, Institutional Change and Economic Performance, Cambridge University Press: Cambridge, UK.
102. North, D.C. and Thomas, R.P. (1973) The Rise of the Western World: A New Economic History, Cambridge University Press: Cambridge, UK.
103. Oliver, C. (1992) 'The antecedents of deinstitutionalization', Organization Studies 13(4): 563-588.
104. Oliver, C. (1997) 'Sustainable competitive advantage: combining institutional and resource-based views', Strategic Management Journal 18(9): 697-713.
105. Orru, M., Biggart, N.W. and Hamilton, G.G. (1991) 'Organizational isomorphism in East Asia', in W.W. Powell and P.J. DiMaggio (eds.) The New Institutionalism in Organizational Analysis, University of Chicago Press: Chicago, pp: 361-389.
106. Penrose, E.T. (1959) The Theory of the Growth of the Firm, Basil Blackwell: London.
107. Porter, M.E. (1980) Competitive Strategy, Free Press: New York.
108. Porter, M.E. (1990) The Competitive Advantage of Nations, Free Press: New York.
109. Powell, W.W. and DiMaggio, P.J. (1991) The New Institutionalism in Organizational Analysis, University of Chicago Press: Chicago.
110. Ricart, J.E., Enright, M.J., Ghemawat, P., Hart, S.L. and Khanna, T. (2004) 'New frontiers in international strategy', Journal of International Business Studies 35(3): 1 75-200.
111. Ring, P.S., Bigley, G.A., D'Aunno, T. and Khanna, T. (2005) 'Perspectives on how governments matter', Academy of Management Review 30(2): 308-320.
112. Rodriguez, P., Uhlenbruck, K. and Eden, L. (2005) 'Government corruption and the entry strategies of multinationals', Academy of Management Review 30(2): 383-396.
113. Rosenzweig, P.M. and Singh, J.V. (1991) 'Organizational environments and the multinational enterprise', Academy of Management Review 16(2): 340-361.
114. Rugman, A.M. (1981) Inside the Multinationals: The Economies of Internal Markets, Croom Helm: London.
115. Scharfstein, D.S. and Stein, J.C. (1990) 'Herd behavior and investment', The American Economic Review 80(3): 465-479.
116. Scott, W.R. (1995) Institutions and Organizations, Sage Publications: Thousand Oaks, CA.
117. Scott, W.R. (2001) Institutions and Organizations, 2nd edn, Sage Publications: Thousand Oaks, CA.
118. Scott, W.R., Ruef, M., Mendel, P.J. and Caronna, C.A. (2000) Institutional Change and Healthcare Organizations: From Professional Dominance to Managed Care, University of Chicago Press: Chicago.
119. Shaver, J.M. (1998) 'Do Foreign-owned and US-owned establishments exhibit the same location pattern in US manufacturing industries?' Journal of International Business Studies 29(3): 469-492.
120. Shaver, J.M., Mitchell, W. and Yeung, B. (1997) 'The effect of own-firm and other-firm experience on foreign direct investment survival in the United States, 1987-1992', Strategic Management Journal 18(10): 811-824.
121. Skocpol, T. (1979) States and Social Revolutions, Cambridge University Press: Cambridge, UK.
122. Suchman, M.C. (1995a) 'Localism and globalism in institutional analysis: the emergence of contractual norms in venture finance', in W.R. Scott and S. Christensen (eds.) The Institutional Construction of Organizations, Sage Publications: Thousand Oaks, CA, pp: 39-63.
123. Suchman, M.C. (1995b) 'Managing legitimacy: strategic and institutional approaches', Academy of Management Review 20(3): 571-610.
124. Sundaram, A.K. and Black, J.S. (1992) 'The environment and internal organization of multinational enterprises', Academy of Management Review 17(4): 729-757.
125. Sutcliffe, K.M. and Zaheer, A. (1998) 'Uncertainty in the transaction environment: an empirical test', Strategic Management Journal 19(1): 1-23.
126. Swaminathan, A. and Wiedenmayer, G. (1991) 'Does the pattern of density dependence in organizational mortality rates vary across levels of analysis? Evidence from the German brewing industry', Social Science Research 2(1): 45-73.
127. Teece, D.J. (1986) 'Transactions cost economics and the multinational enterprise', Journal of Economic Behavior and Organization 7: 21-45.
128. Terpstra, V. and Yu, C.M. (1988) 'Determinants of foreign investment of US advertising agencies', Journal of International Business Studies 19(1): 33-46.
129. Tolbert, P.S. and Zucker, L.G. (1983) 'Institutional sources of change in the formal structure of organizations: the diffusion of civil service reform, 1880-1935', Administrative Science Quarterly 28(1): 22-39.
130. Weick, K.E. (1995) Sensemaking in Organizations, Sage Publications: Thousand Oaks, CA.
131. Westney, D.E. (1993) 'Institutionalization theory and the multinational corporation', in S. Ghoshal and D.E. Westney (eds.) Organization Theory and the Multinational Corporation, St Martin's Press: New York, pp: 53-76.
132. White, H. (1980) 'A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity', Econometrica 48(4): 81 7-838.
133. Whitley, R. (1992) Business Systems in East Asia: Firms, Markets, and Societies, Sage: London.
134. Wilks, S. and Wright, M. (1987) Comparative Government-Industry Relations, Clarendon Press: Oxford, UK.
135. Woodcock, C.P., Beamish, P.W. and Makino, S. (1994) Ownership-based entry mode strategies and international performance', Journal of International Business Studies 25(2): 253-273.
136. Yamawaki, H. (1994) Japanese Multinationals in US and European Manufacturing, Oxford University Press: New York.
137. Yiu, D. and Makino, S. (2002) 'The choice between joint venture and wholly owned subsidiary: an institutional perspective', Organization Science 13(6): 667-683.
138. Yu, C.M. and Ito, K. (1988) 'Oligopolistic reaction and foreign direct investment: the case of the US tire and textiles industries', Journal of International Business Studies 19(3): 449-460.
139. Zaheer, S. and Zaheer, A. (1997) 'Country effects on information seeking in global electronic networks', Journal of International Business Studies 28(1): 77-100.
140. Zucker, L.G. (1983) 'Organizations as institutions', in S. Bacharach (ed.) Research in the Sociology of Organizations, JAI Press: Greenwich, CT, pp: 1-47.
141. Zucker, L.G. (1988) 'Where do institutional patterns come from? organizations as actors in social systems', in L.G. Zucker (ed.) Institutional Patterns and Organizations: Culture and Environment, Ballinger: Cambridge, MA, pp: 23-49.