Factors affecting perceptions of the choice between acquisition and greenfield entry: The case of western FDI in an emerging market

Management International Review

Volumn 48, Issue 1, 2008, Pages 5-38

  Demirbag, Mehmet ^a   Tatoglu, Ekrem ^b   Glaister, Keith W ^a  

^a UNIVERSITY OF SHEFFIELD   (United Kingdom)

^b BAHCESEHIR UNIVERSITY   (Turkey)

Author keywords

Acquisition greenfield investment; Emerging markets; Institutional theory; Turkey

Indexed keywords

EID: 70350072146     PISSN: 09388249     EISSN: None     Source Type: Journal    
DOI: 10.1007/s11575-008-0002-3     Document Type: Article

References (130)

1. Agarwal, S., Socio-Cultural Distance and the Choice of Joint Ventures: A Contingency Perspective, Journal of International Marketing, 2, 2, 1994, pp. 63-80.
2. Agarwal, S./Ramaswami, S. N., Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors, Journal of International Business Studies, 23, 1, 1992, pp. 1-28.
3. Ahmed, Z. U./Mohamad, O./Tan, B ./Johnson, J. P., International. Risk Perceptions and Mode of Entry: A Case Study of Malaysian Multinational Firms, Journal of Business Research, 55, 10, 2002, pp. 805-813.
4. Aharoni, Y., The Foreign Investment Decision Process, Graduate School of Business Administration, Boston Massachusetts: Harvard University 1966.
5. Ainemiya, T., Qualitative Response Models: A Survey, Journal of Economic Literature, 19, 4, 1981, pp. 1483-1536.
6. Anand, J./Delios, A., Location Specifity and the Transferability of Downstream Assets to Foreign Subsidiaries, Journal of International Business Studies, 28, 3, 1997, pp. 579-603.
7. Anderson, E./Gatignon, H., Models of Foreign Entry: A Transaction Cost Analysis and Propositions, Journal of Internationa! Business Studies, 17, 3, 1986, pp. 1-26.
8. Andersson, T./Swensson, R., Entry Modes for Direct Investment Determined by the Composition of FirmSpecific Skills, Scandinavian Journal of Economics, 96, 4, 1994, pp. 551-560.
9. Antaloczy, K./Sass, M., Greenfield Investments in Hungary: Are They Different From Privatization FDI?, Transnational Corporations, 10, 3, 2001, pp. 39-59.
10. Barkema, H. G./Vermeulen, F., International. Expansion through Start-up or Acquisition: A Learning Perspective, Academy of Management Journal, 41, 1, 1998, pp. 7-26.
11. Barkema, H. G./Bell, J. H. J.,/Pennings, J. M., Foreign Entry, Cultural Barriers and Learning, Strategic Management Journal, 17, 2, 1996, pp. 151-166.
12. Beamish, P. W., Multinational Joint Ventures in Developing Countries, London: Routledge 1988.
13. Bell, J. H. J., Single or Joint Venturing?: A Comprehensive Approach to Foreign Entry Mode Choice, Aldershot, England: Avebury 1996.
14. Brouthers, K. D., The Influence of International Risk on Entry Mode Strategy in the Computer Software Industry, Management International Review, 35, 1, 1995, pp. 7-28.
15. Brouthers, K. D., Institutional., Cultural and Transaction Cost Influences on Entry Mode Choice and Performance, Journal of International Business Studies, 33, 2, 2002, pp. 203-221.
16. Brouthers, L. E./Brouthers, K. D./Werner, S., Is Dunning's Eclectic Framework. Descriptive or Normative?, Journal of International Business Studies, 30, 4, 1999, pp. 831-844.
17. Brouthers, K. D./Brouthers, L. E., Why Service and Manufacturing Entry Mode Choices Differ: The Influence of Transaction Cost Factors, Risk and Trust, Journal of Management Studies, 40, 5, 2003, pp. 1179-1204.
18. Brouthers, K. D./Brouthers, L. E., Acquisition or Greenfield Start-up? Institutional, Cultural and Transaction Cost Influences, Strategic Management Journal, 21, 1, 2000, pp. 89-97.
19. Brouthers, K. D./Brouthers, L. E./Werner, S., Industrial Sector, Perceived Environmental Uncertainty and Entry Mode Strategy, Journal of Business Research, 55, 6, 2002, pp. 495-507.
20. Brown, J. G., Using a Multiple Imputation Technique to Merge Data Sets, Applied Economics Letters, 9, 5, 2002, pp. 311-314.
21. Buckley, P. J./Mathew, A.M., Dimensions of Market Entry Behavior of Recent U.K. First Time Direct Investors in Australia, Management International Review, 20, 2, 1980, pp. 35-51.
22. Buckley, P. J./Casson M. C., The Economic Theory of the Multinational Enterprise: Selected Papers, London: Macmillan. 1985.
23. Buckley, P./Casson, M., Analyzing Foreign Market Entry Strategies: Extending the Internalization Approach, Journal of International Business Studies, 29, 3, 1998, pp.539-562.
24. Calderon, C./Loayza, N./Serven, L., Greenfield Foreign Direct Investment and Mergers and Acquisitions: Feedback and Macroeconomic Effects, Policy Research Working Paper Series No. 3192, Washington: The World Bank 2004.
25. Cameron G./Wolfson M., Missing Transfers: Adjusting Household Incomes for Non-cash Benefits, Statistics Canada Paper presented at the 23"1 Annual Conference of the International Association for Research in Income and Wealth, St. Andrews, New Brunswick, Canada: 21-27. August 1994.
26. Caves, R. E./Mehra, S. K., Entry of Foreign Multinationals into U.S. Manufacturing Industries, in. Porter, M. E. (ed.), Competition in Global Industries, Boston, Massachusetts: Harvard Business School Press 1986, pp. 449-481.
27. Chang, S. J./Rosenzweig, P. M., The Choice of Entry Mode in Sequential Foreign Direct Investment, Strategic Management Journal, 22, 8, 2001, pp. 747-776.
28. Chatterjee, S., Excess Resources, Utilization Costs, and Entry Mode, Academy of Management Journal, 33, 4, 1990, pp. 780-800.
29. Child, J./Chung, L./Davies, H., The Performance of Cross-border Units in China: A Test of Natural Selection, Strategic Choice and Contingency Theories, Journal of International Business Studies, 34, 3, 2003, pp. 242-254.
30. Chowdhury, J., Performance of International. Joint Ventures and Wholly Owned Subsidiaries, Management International Review, 32, 2, 1992, pp. 115-133.
31. Coase, R. H., The Institutional Structure of Production, American Economic Review, 82, 4, 1992, pp. 713-719.
32. Cyert, R./March, J., A Behavioral Theory of the Firm, Englewood Cliffs, New Jersey: Prentice Hall 1963.
33. Das, T. K./Teng, B. S., A Resource Based Theory of Strategic Alliances, Journal of Management, 26, 1, 2000, pp. 31-61.
34. Davidson, W. H., The Location of Foreign Direct Investment Activity: Country Characteristics and Experience Effects, Journal of International Business Studies, 11, 2, 1980, pp. 9-22.
35. Davidson, W. H./McFetridge, D. G., Key Characteristics in the Choice of International. Technology Transfer Mode, Journal of International Business Studies, 16, 2, 1985, pp. 5-21.
36. Demirbag, M./Mirza, H./Weir, D. T. H., The Dynamics of Manufacturing Joint Ventures in Turkey and the Role of Industrial Groups, Management International Review, 35, Special Issue 1, 1995, pp. 35-51.
37. Dunning, J. H., The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions, Journal of International Business Studies, 19, 1, 1988, pp. 1-31.
38. Dunning, J. H., Multinational Enterprises and Global Economy, Wokingham: Addison-Wesley 1993.
39. Dunning, J. H./Kundu, S. K., The Internationalization of the Hotel Industry-Some New Findings from a Field Study, Management International Review, 35, 2, 1995, pp. 101-133.
40. Ellis, P., Social Ties and Foreign Market Entry, Journal of International Business Studies, 31, 3, 2000, pp. 443-469.
41. Erdilek, A., A Comparative Analysis of Inward and Outward FDI in Turkey, Transnational Corporations, 12, 3, 2003, pp. 79-105.
42. Ernst and Young Turkey (ed.), Mergers and Acquisitions Report 2004, (Birlesme ve Satinalma Islemleri 2004 Raporu), Istanbul: Emst and Young 2005.
43. Erramilli, M. K., The Experience Factor in Foreign Market Entry Behavior of Service Firms, Journal of International Business Studies, 22, 3, 1991, pp. 479-501.
44. Erramilli, M. K./Rao, C. P., Service Firms' International Entry Mode Choice: A Modified Transaction-cost Analysis Approach, Journal of Marketing, 57, 3, 1993, pp. 19-38.
45. Franko, L. G. Joint Venture Survival in Multinational Corporations, New York: Preager Publisher 1971.
46. Financial Times (ed.), Daily Newspaper, April 13, 2005, www.ft.com.
47. Gatignon, H./Anderson, E., The Multinational Corporation's Degree of Control. Over Foreign Subsidiaries: An Empirical. Test of a Transaction Cost Explanation, Journal of Law, Economics, and Organization, 4, 2, 1988, pp. 305-336.
48. GDFI, 2004. http://www.hazine.gov.tr/english/ybs/geneling.htm.
49. Gomes-Casseres, B., Ownership Structures of Foreign Subsidiaries, Journal of Economic Behavior and Organization, 11, 1, 1989, pp. 1-25.
50. Gomes-Casseres, B., Firm. Ownership Preferences and Host Government Restrictions: An Integrated Approach, Journal of International Business Studies, 21, 1, 1990, pp. 1-22.
51. Goodnow, J. D./Hansz, J. E., Environmental Determinants of Overseas Market Entry Strategies, Journal of International Business Studies, 3, 1, pp. 33-50.
52. Goodnow, J. D., Development in International Mode of Entry Analysis, International Marketing Review, 2, 3, 1985, pp. 17-30.
53. th edition, Englewood Cliffs, New Jersey: Prentice Hall 1995.
54. Harrigan, K. R., Vertical Integration and Corporate Strategy, Academy of Management Journal, 28, 2, 1985a, pp. 397-425.
55. Harrigan, K. R., Strategies for Intrafirm Transfers and Outside Sourcing, Academy of Management Journal, 28, 4, 1985b, pp. 914-925.
56. Harzing, A. W., Acquisitions versus Greenfield Investments: International Strategy and Management of Entry Modes, Strategic Management Journal, 23, 3, 2002, pp. 211-227.
57. Henisz, W. J., The Institutional Environment for Multinational Investment, Journal of Law, Economics and Organization, 16, 2, 2000, pp. 334-364.
58. Hennart, J. F/Park, Y. R., Greenfield vs. Acquisition: The Strategy of Japanese Investors in the United States, Management Science, 39, 9, 1993, pp. 1054-1070.
59. Hennart, J. F., The Transaction Costs Theory of Joint Ventures: An Empirical Study of Japanese Subsidiaries in the United States, Management Science, 37, 4, 1991, pp. 483-497.
60. Hennart, J. F./Larimo, J., The Impact of Culture on the Strategy of Multinational Enterprises: Does National Origin Affect Ownership Decisions, Journal of International Business Studies, 29, 3, 1998, pp. 515-538.
61. Hennart, J. F./Reddy, S., The Choice between Mergers/Acquisitions, and Joint Ventures: The Case of Japanese Investors in the United States, Strategic Management Journal, 18, 1, 1997, pp. 1-12.
62. Hladik, K. J., International Joint Ventures: An Economic Analysis of U.S. Foreign Business Partnerships, Lexington, Massachusetts: Lexington Books 1985.
63. Hofstede, G., Culture's Consequences, Beverly Hills, California: Sage Publications 1980.
64. Huber, G. P./Power, D. J., Retrospective Reports of Strategic-Level Managers: Guidelines for Increasing Their Accuracy, Strategic Management Journal, 6, 2, 1985, pp. 171-180.
65. Hurriyet (ed.), Daily Newspaper (www.hurriyet.coin.tr) April. 9, 2005.
66. Kim, W. C./Hwang, P., Global Strategy and Multinationals' Entry Mode Choice, Journal of International Business Studies, 23, 1, 1992, pp. 29-54.
67. Kobrin, S. J., Environmental. Determinants of Foreign Manufacturing Investment: An Ex Post Empirical Analysis, Journal of International Business Studies, 7, 2, 1976, pp. 29-42.
68. Kogut, B./Singh, H., The Effect of National Culture on the Choice of Entry Mode, Journal of International Business Studies, 19, 3, 1988, pp. 411-432.
69. Kumar, V./Subramaniam, V., A Contingency Framework for the Mode of Entry Decision, Journal of World Business, 31, 2, 1997, pp. 53-72.
70. Lane, P. J. /SaIk, J. E./Lyles, M. A., Absorptive Capacity, Learning and Performance in International Joint Ventures, Strategic Management Journal, 22, 12, 2001, pp. 1139-1161.
71. Larimo, J., Form of Investment by Nordic Finns in. World Markets, Journal of Business Research, 56, 10, 2003, pp. 791-803.
72. Laurila, J./Ropponen, M., Institutional Conditioning of Foreign Expansion: Some Evidence From Finnishbased Paper Industry Firms 1994-2000, Journal of Management Studies, 40, 3, 2003, pp. 725-751.
73. Lecraw, D. J., Bargaining Power, Ownership and Profitability of Transnational. Corporations in Developing Countries, Journal of International Business Studies, 15, 1, 1984, pp. 27-43.
74. Lee, J. R./Chen, W. R./Kao, C., Bargaining Power and Trade-off between the Ownership and Control of International Joint Ventures in China, Journal of International Management, 4, 4, 1998, pp. 353-385.
75. Li, S., Location and Performance of Foreign Firms in China, Management International Review, 44, 2, 2004, pp. 151-170.
76. Lipsey, R. E., Interpreting Developed Countries' Foreign Direct Investment, NBER Working Paper No. 7810, Cambridge, Massachusetts: National Bureau of Economic Research 2000.
77. Loewendahl, H./Ertugal-Loewendahl, E., Turkey's Performance in Attracting Foreign Direct Investment: Implications of EU Enlargement, CEPS Working Document No. 157, Brussels, Belgium: The Center for European Policy Studies 2000.
78. Loree, D. W.,/Guisinger, S. E., Policy and Non-Policy Determinants of U.S. Equity Foreign Direct Investment, Journal of International Business Studies, 26, 2, 1995, pp. 281-299.
79. Luo, Y., Determinants of Entry in an Emerging Economy: A Multilevel. Approach, Journal of Management Studies, 38, 3, 2001, pp. 443-472.
80. Madhok, A., Revisiting Multinational Firms' Tolerance for Joint Ventures: A Trust Based Approach, Journal of International Business Studies, 26, 1, 1995, pp. 117-137.
81. Madhok, A., Cost, Value and Foreign Market Entry Mode: The Transaction and the Firm, Strategic Management Journal, 18, 1, 1997, pp. 39-61.
82. Madhok, A., The Nature of Multinational firm Boundaries: Transaction Costs, Finn Capabilities and Foreign Market Entry Mode, International Business Review, 7, 3, 1998, pp. 259-290.
83. Makino, S./Isobe, T./Chan, C. M., Does Country Matter?, Strategic Management Journal, 25, 10, 2004, pp. 1027-1043.
84. Malhotra, N., The Nature of Knowledge and the Entry Mode Decision, Organization Studies, 24, 6, 2003, pp. 935-959.
85. Mallya, T. J. S./Kukulka, Z./Jensen, C., Are Incentives a Good Investment for the Host Country?.An Empirical Evaluation of the Checz National Incentive Scheme, Transnational Corporations, 13, 1, 2004, pp. 109-148.
86. McCloughan, P./Stone, I., Life Duration of Foreign Multinational Subsidiaries: Evidence from UK Northern Manufacturing Industry 1970-1993, Internationa! Journal of Industrial Organization, 16, 6, 1998, pp. 719-747.
87. Meyer, K. E., Institutions, Transaction Costs, and Entry Mode Choice in Eastern Europe, Journal of International Business Studies, 32, 2, 2001, pp. 357-367.
88. Meyer, K. E., Perspectives on Multinational Enterprises in Emerging Economies, Journal of International Business Studies, 35, 4, 2004, pp. 259-276.
89. Meyer, K. E./Estrin, S., Brownfield Entry in Emerging Markets, Journal of International Business Studies, 32, 3, 2001, pp. 575-584.
90. Meyer, K. E./Nguyen, H. V., Foreign Investment Strategies and Sub-national Institutions in Emerging Markets: Evidence from Vietnam, Journal of Management Studies, 42, 1, 2005, pp. 63-93.
91. Moxon, R. W., The Motivation for Investment in Offshore Plants: The Case of the U.S. Electronics Industry, Journal of International Business Studies, 6, 1, 1975, pp. 51-66.
92. Mudambi, R., The Role of Duration in Multinational Investment Strategies, Journal of International Business Studies, 29, 2, 1998, pp. 239-262.
93. Mudambi, R./Mudambi, S. M., Diversification and Market Entry Choices in the Context of Foreign Direct Investment, International Business Review, 11, 1, 2002, pp. 35-55.
94. Mudambi, R./Navarra, P., Institutions and International Business, International Business Review, 11, 6, 2002, pp. 635-646.
95. Newbury, W./Zeira, Y., Generic Differences between. Equity International Joint Ventures (EUVs), International Acquisitions (IAs) and International Greenfield Investments (IGIs): Implications for Parent Companies, Journal of World Business, 32, 2, 1997, pp. 87-102.
96. North, D., Institutions, Journal of Theory of Politics, 2, 4, 1991, pp. 355-367.
97. nd edition, New York: McGraw-Hill 1978.
98. Padinanabhan, P./Cho, K. R., Methodological Issues in International Business Studies: The Case of Foreign Establishment Mode Decisions by Multinational. Finns, International Business Review, 4, 1, 1995, pp. 55-73.
99. Padmanabhan, P./Cho, K. R., Decision Specific Experience in Foreign Ownership and Establishment Strategies: Evidence from Japanese Finns, Journal of International Business Studies, 30, 1, 1999, pp. 25-44.
100. Park, S. H./Ungson, G. R., The Effect of National Culture, Organizational. Complementarity, and Economic Motivation on Joint Venture Dissolution, Academy of Management Journal, 40, 2, 1997, pp. 279-307.
101. Peng, M. W., Business Strategies in Transition Economies, Thousand Oaks, California: Sage 2000.
102. Pfeffer, J./Salancik, G. R., The External Control of Organizations: A Resource Dependence Perspective, New York: Harper and Row 1978.
103. Porter, M. E., Competitive Strategy: Techniques for Analyzing Industries and Competitors, New York: Free Press 1980.
104. Porter, M. E., The Competitive Advantage of Nations, New York: Free Press 1990.
105. Ramainurti, R., The Obsolescing Bargaining Model? MNC-Host Developing Country Relations Revisited, Journal of International Business Studies, 32, 1, 2001, pp. 23-39.
106. Root, F. R., Entry Strategies for International Markets, Lexington, Massachusetts: Lexington Books 1987.
107. Root, F. R./Ahmed, A. A., The Influence of Policy Instruments on Manufacturing Direct Foreign Investment in Developing Countries, Journal of International Business Studies, 9, 3, 1978, pp. 81-93.
108. Rumelt, R. P., Strategy, Structure and Economic Performance, Boston: Division of Research, Harvard Business School 1974.
109. Sabi, M., An Application of the Theory of Foreign Direct Investment to Multinational Banking in LDCs, Journal of International Business Studies, 19, 4, 1988, pp. 433-447.
110. Schofield, D./Polette, J., A Comparison of Data Merging Methodologies for Extending a Microsimulation Model, Brazilian Electronic Journal of Economics, 2, 1, 1999, http://www.beje.decon.ufpe.br/num.ber2/polette.htm.
111. Sethi, D./Guisinger, S. E./Phelan,S. E./Berg, D. M., Trends in Foreign Direct Investment Flows: A Theoretical and Empirical Analysis, Journal of International Business Studies, 34, 4, 2003, pp. 315-326.
112. Sethi, S. P./Luther, K. A. N., Political Risk Analysis and Direct Foreign Investment: Some Problems of Definition and Measurement, California Management Review, 28, 2, 1986, pp. 57-68.
113. Shaver, M. J., Accounting for Endogeneity when Assessing Strategy Performance: Does Entry Mode Choice Affect FDI Survival?, Management Science, 44, 4, 1998, pp. 571-585.
114. Szanyi, M., Privatization and Greenfield FDI in the Economic Restructuring of Hungary, Transnational Corporations, 10, 3, 2001, pp. 25-37.
115. Tatoglu, E./Glaister, K. W., Dimensions of Western Foreign Direct Investment in Turkey, Westport, Connecticut: Quorum Books 2000.
116. Tatoglu, E./Glaister, K. W./Erdal, F., Determinants of Foreign Ownership in Turkish Manufacturing, Eastern European Economics, 41, 2, 2003, pp. 5-41.
117. Turkan, E., The Share of Foreign Capital in Economic Activity in Turkey (Turkiye'de Ekonomik Aktivitě Icinde Yabanci Sennaye Payi), Ankara: Central Bank of Turkey 2005.
118. Uhlenbruck, K., Developing Acquired Foreign Subsidiaries: The Experience of MNEs in Transition Economies, Journal of International Business Studies, 35, 2, 2004, pp. 109-123.
119. Ulgado, F. M., Location Characteristics of Manufacturing Investments in the U.S.: A Comparison of American and Foreign-based Finns, Management International Review, 36, 1, 1996, pp. 7-26.
120. UNCTAD (ed.), UNCTAD Note to Correspondents No. 24, New York, Geneva: United Nations 2000, http://r0.unctad.org/en/Press/nc0127.htm.
121. Very, P./Schweiger, D.M., The Acquisition Process as a Learning Process: Evidence From a Study of Critical Problems and Solutions in Domestic and Cross-border Deals, Journal of World Business, 36, 1, 2001, pp. 11-31.
122. Wan, W. P./Hoskisson, R. E., Home Country Environments, Corporate Diversification Strategies and Firm Performance, Academy of Management Journal, 46, 1, 2003, pp. 27-45.
123. Wes, M./Lankes, H. P., FDI in Economies in Transition: M&As Versus Greenfield Investment, Transnational Corporations, 10, 3, 2001, pp. 113-129.
124. Williamson, O. E., The Mechanisms of Governance, New York, Oxford University Press, 1996.
125. Williamson, O. E., The New Institutional Economics: Taking Stock, Looking Ahead, Journal of Economic Literature, 38, 3, 2000, pp. 595-613.
126. Wilson, B., The Propensity of Multinational Companies to Expand through Acquisitions, Journal of International Business Studies, 11, 1, 1980, pp. 59-65.
127. Yan, A./Gray, B., Bargaining Power, Management Control, and Performance in United States-Chinese Joint Ventures: A Comparative Case Study, Academy of Management Journal, 37, 6, 1994, pp. 1478-1517.
128. Yip, G. S., Diversification Entry: Internal Development versus Acquisition, Strategic Management Journal, 3, 4, 1982, pp. 331-345.
129. Young, S./Hamill, J./Wheeler, C./Davies, J. R., International Market Entry and Development, Harvester Wheatsheaf: Prentice Hall 1989.
130. Zejan, M. C., New Ventures or Acquisitions: The Choice of Swedish Multinational Enterprises, Journal of Industrial Economics, 38, 3, 1990, pp. 349-355.