Ownership Strategy of Multinational Enterprises and the Impacts of Regulative and Normative Institutional Distance: Evidence from Finnish Foreign Direct Investments in Central and Eastern Europe

Journal of East-West Business

Volumn 16, Issue 3, 2010, Pages 179-200

  Arslan, Ahmad ^a   Larimo, Jorma ^a  

^a UNIVERSITY OF VAASA   (Finland)

Author keywords

Central and Eastern Europe; International joint ventures; Normative institutional distance; Ownership strategy; Regulative institutional distance; Wholly owned subsidiaries

Indexed keywords

CORPORATE STRATEGY; FIRM OWNERSHIP; FOREIGN DIRECT INVESTMENT; INSTITUTIONAL FRAMEWORK; JOINT VENTURE; MULTINATIONAL ENTERPRISE;

CENTRAL EUROPE; EASTERN EUROPE;

EID: 78149371908     PISSN: 10669868     EISSN: 15286959     Source Type: Journal    
DOI: 10.1080/10669868.2010.523370     Document Type: Article

References (83)

1. Amemiya, T. 1981. Qualitative response models: A survey. Journal of Economic Literature 4 (4): 1483-1536.
2. Bertoncelj, A., M. Dermastia, and D. Kesic. 2007. Knowledge-based industry after market liberalisation: The case of the local pharmaceutical industry in Central and Eastern Europe. International Journal of Technology and Globalisation 3 (3): 263-277.
3. Blomstermo, A., K. Eriksson, A. Lindstrand, and D. D. Sharma. 2004. The perceived usefulness of network experiential knowledge in the internationalizing firm. Journal of International Management 10 (3): 355-373.
4. Bridgewater, S. 1999. Networks and internationalisation: The case of multinational corporations entering Ukraine. International Business Review 8 (1): 99-118.
5. Brouthers, K. D. 2002. Institutional, cultural and transaction cost influences on entry mode choice and performance. Journal of International Business Studies 33 (2): 203-221.
6. Brouthers, K. D., and G. Bamossy. 1997. The role of key stake holders in inter- national joint venture negotiations: Case studies from Eastern Europe. Journal of International Business Studies 28 (2): 285-308.
7. Brouthers, K. D., and L. E. Brouthers. 2001. Explaining the national cultural distance paradox. Journal of International Business Studies 32 (1): 177-189.
8. Brouthers, K. D., and L. E. Brouthers. 2003. Why service and manufacturing entry mode choices differ: The influence of transaction cost factors, risk and trust. Journal of Management Studies 40 (5): 1179-1204.
9. Brouthers, K. D., L. E. Brouthers, and G. Nakos. 1998. Entering Central and Eastern Europe: Risks and cultural barriers. Thunderbird International Business Review 40 (5): 485-504.
10. Brouthers, K. D., and J.-F. Hennart. 2007. Boundaries of the firm: Insights from international entry mode research. Journal of Management 33 (3): 395-425.
11. Brouthers, L. E., K. D. Brouthers, and S. Werner. 1999. Is Dunning's eclectic frame-work descriptive or normative? Journal of International Business Studies 30 (4): 831-844.
12. Chang, S. J., and P. M. Rosenzweig. 2001. The choice of entry mode in sequential foreign direct investment. Strategic Management Journal 22 (8): 747-776.
13. Chao, M. C., and V. Kumar. 2010. The impacts of institutional distance on international diversity-performance relationship. Journal of World Business 45 (1): 93-103.
14. Davis, P. S., A. B. Desai, and J. D. Francis. 2000. Mode of international entry: An isomorphism perspective. Journal of International Business Studies 31 (2): 239-258.
15. Delios, A., and P. W. Beamish. 1999. Ownership strategy of Japanese firms: Transactional, institutional and experience influences. Strategic Management Journal 20 (9): 711-727.
16. Delios, A., and W. J. Henisz. 2000. Japanese firms' investment strategies in emerging economies. Academy of Management Journal 43 (3): 305-323.
17. Dikova, D., and A. van Witteloostuijn. 2007. Foreign direct investment mode choice: Entry and establishment modes in transition economies. Journal of Inter- national Business Studies 38 (6): 1013-1033.
18. Dunning, J. H., and S. Lundan. 2008. Multinational enterprises and the global economy. 2nd ed. Cheltenham, UK: Elgar.
19. Eden, L., and S. Miller. 2004. Distance matters: Liability of foreignness, institutional distance and ownership strategy. In Advances in international management, ed. M. Hitt and J. Cheng, 187-221. Vol. 16. New York: Elsevier.
20. Eriksson, K., J. Johanson, A. Majkgard, and D. Sharma. 1997. Eexperiential knowledge and cost in the internationalization process. Journal of International Business Studies 28 (2): 337-360.
21. Ellis, P. D. 2008. Does psychic distance moderate the market size-entry sequence relationship? Journal of International Business Studies 39 (3): 351-369.
22. Estrin, S., D. Baghdasaryan, and K. E. Meyer. 2009. The impact of institutional and human resource distance on international entry strategies. Journal of Manage- ment Studies 46 (7): 1171-1196.
23. Evans, J., F. T. Mavondo, and K. Bridson. 2008. Psychic distance: Antecedents, retail strategy implications and performance outcomes. Journal of Marketing 16 (2): 32-63.
24. Fahy, J., G. Hooley, T. Cox, J. Beracs, K. Fonfoara, and B. Snoj. 2000. The develop- ment and impact of marketing capabilities in Central Europe. Journal of International Business Studies 31 (1): 63-82.
25. Gatignon, H., and E. Anderson. 1988. The multinational corporation's degree of con- trol over foreign subsidiaries: An empirical test of a transaction cost explanation. Journal of Law, Economics and Organization 4 (2): 305-336.
26. Gaur, A. S., and J. W. Lu. 2007. Ownership strategies and survival of foreign subsidiaries: Impacts of institutional distance and experience. Journal of Management 33 (1): 84-110.
27. Gaur, A. S., A. Delios, and K. Singh. 2007. Institutional environments, staffing strategies and subsidiary performance. Journal of Management 33 (4): 611-636.
28. Gelbuda, M., K. E. Meyer, and A. Delios. 2008. International business and insti- tutional development in Central and Eastern Europe. Journal of International Management 14 (1): 1-12.
29. Grewal, R., and R. Dharwadkar. 2002. The role of the institutional environment in marketing channels. Journal of Marketing 66 (3): 82-97.
30. Guler, I., M. Guillen, and J. Macpherson. 2002. Global competition, institutions and the diffusion of organizational practices: Human resource management in European firms. Administrative Science Quarterly 47:207-232.
31. Gutman, P. 1992. Joint ventures in Eastern Europe and the dynamics of reciprocal flows in east-west direct investments: Some new perspectives. In Foreign direct investment in Central and Eastern Europe, ed. P. Artisien, R. Majija, and M. Svetlicic, 54-81. London: Macmillan.
32. Hair, J. F. Jr., R. E. Anderson, R. L. Tatham, and W. C. Black. 1995. Multivariate data analysis. 4th ed. Upper Saddle River, NJ: Prentice Hall.
33. Harzing, A. W. 2002. Acquisitions versus greenfield investments: International strategy and management of entry modes. Strategic Management Journal 23 (3): 211-228.
34. Henisz, W. J. 2000. The institutional environment for multinational investment. Journal of Law, Economics and Organization 16 (2): 334-364.
35. Henisz, W. J. 2003. The power of Buckley and Casson thesis: The ability to manage institutional idiosyncrasies. Journal of International Business Studies 34 (1): 173-184.
36. Henisz, W. J. 2004. The institutional environment for international business. In What is international business, ed. P. J. Beckley, 85-109. New York: Palgrave Macmillan.
37. Hennart, J. F. 1991. The transaction cost theory of joint ventures: An empirical study of Japanese subsidiaries in the United States. Management Science 37 (4): 483-497.
38. Hennart, J. F., and J. Larimo. 1998. The impact of culture on the strategy of multinational enterprises: Does national origin affect ownership decisions by foreign direct investors into the United States? Journal of International Business Studies 29 (3): 515-538.
39. Hofstede, G. 1980. Culture's consequences: International differences in work-related values. Newbury Park, CA: Sage.
40. Hofstede, G. 2001. Culture's consequences, Comparing values, behaviors, institu- tions, and organizations across nations. Thousand Oaks, CA: Sage.
41. Johanson, J., and J. E. Vahlne. 1977. The internationalization process of the firm: A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies 8 (Spring and Summer): 22-32.
42. Kaynak, E., M. Demirbag, and E. Tatoglu. 2007. Determinants of ownership based entry mode choice of MNEs: Evidence from Mongolia. Management International Review 47 (4): 505-530.
43. Kogut, B., and H. Singh. 1988. The effect of national culture on the choice of entry mode. Journal of International Business Studies 19 (3): 411-432.
44. Kostova, T. 1997. Country institutional profiles: Concept and measurement. Academy of Management Proceedings, 180-184.
45. Kostova, T. 1999. Transnational transfer of strategic organizational practices: A contextual perspective. Academy of Management Review 24 (2): 308-324.
46. Kostova, T., and S. Zaheer. 1999. Organizational legitimacy under conditions of complexity: The case of the multinational enterprise. Academy of Management Review 24 (3): 64-81.
47. Kostova, T., and K. Roth. 2002. Adoption of an organizational practice by subsidi- aries of multinational corporations: Institutional and relational effects. Academy of Management Journal 45 (1): 215-233.
48. Kostova, T., K. Roth, and T. Dacin. 2008. Institutional theory in the study of MNCs: A critique and new directions. Academy of Management Review 33 (4): 994-1007.
49. Lenartowicz, T., and K. Roth. 2001. Does subculture within a country matter? A cross-cultural study of motivational domains and business performance in Brazil. Journal of International Business Studies 32 (2): 305-320.
50. Meyer, K. E. 2001. Institutions, transaction costs and entry mode choice in Eastern Europe. Journal of International Business Studies 32 (2): 357-367.
51. Meyer, K. E. 2002. Management challenges in privatization acquisitions in transition economies. Journal of World Business 37 (4): 266-276.
52. Meyer, K. E., and S. Estrin. 2001. Brownfield entry in emerging markets. Journal of International Business Studies 32 (3): 575-584.
53. Meyer, K. E., and M. W. Peng. 2005. Probing theoretically into Central and Eastern Europe: Transactions, resources, and institutions. Journal of International Business Studies 36 (6): 600-621.
54. Meyer, K. E., and Y. T. T. Tran. 2006. Market penetration and acquisition strategies for emerging economies. Long Range Planning 39 (2): 177-197.
55. Mezias, S. J. 1990. An institutional model of organizational practice: Financial report- ing at the Fortune 200. Administrative Science Quarterly 35 (3): 431-457.
56. Nakos, G., and K. D. Brouthers. 2002. Entry mode choice of SMEs in Central and Eastern Europe. Entrepreneurship Theory and Practice 27 (1): 46-63.
57. Niemans, J. 1993. Market entry approaches for central Europe. Journal of Business Strategy 14 (2): 26-32.
58. North, D. C. 1990. Institutions, institutional change and economic performance. New York: Cambridge University Press.
59. Padmanabhan, P., and K. R. Cho. 1996. Ownership strategy for a foreign affiliate: An empirical investigation of Japanese firms. Management International Review 36 (1): 45-65.
60. Pan, Y. 1996. Influences on foreign equity ownership level in joint ventures in China. Journal of International Business Studies 27 (1): 1-26.
61. Peng, M. W. 2003. Institutional transitions and strategic choices. Academy of Management Review 28 (2): 275-296.
62. Peng, M. W., and T. A. Khoury. 2009. Unbundling the institution-based view of inter- national business strategy. In The Oxford handbook of international business, 2nd ed., ed. A. Rugman, 256-268. New York: Oxford University Press.
63. Scott, W. R. 1995. Institutions and organizations. Thousand Oaks, CA: Sage.
64. Scott, W. R. 2003. Organizations: Rational, natural and open systems. 5th ed. Upper Saddle River, NJ: Prentice Hall.
65. Scott, W, R. 2008. Institutions and organizations: Ideas and interests. 3rd ed. Thousand Oaks, CA: Sage.
66. Shenkar, O. 2001. Cultural distance revisited: Towards a more rigorous conceptualization and measurement of cultural differences. Journal of International Business Studies 32 (3): 519-535.
67. Snowdon, B., and G. Stonehouse. 2006. Competitiveness in a globalised world: Michael Porter on the microeconomic foundations of the competitiveness of nations, regions, and firms. Journal of International Business Studies 37 (2): 176-178.
68. Svejnar, J. 2002. Transition economies: Performance and challenges. Journal of Economic Perspectives 16 (1): 3-28.
69. Tallman, S., and K. Fladmoe-Lindquist. 2002. Internationalization, globalization, and capability-based strategy. California Management Review 45 (1): 116-135.
70. Tixier, M. 1994. Management and communication styles in Europe: Can they be compared and matched? Employee Relations 16 (1): 8-26.
71. Uhlenbruck, K., and J. O. De Castro. 2000. Foreign acquisitions in Central and Eastern Europe: Outcomes of privatization in transitional economies. Academy of Management Journal 43 (3): 381-402.
72. Wan, W. P., and R. E. Hoskisson. 2003. Home country environments, corporate diversification strategies, and firm performance. Academy of Management Journal 46 (1): 27-45.
73. Warner, M., and C. W. Daugherty. 2004. Promoting the 'civic' in entrepreneurship: The case of rural Slovakia. Journal of the Community Development Society 35 (1): 117-134.
74. Westney, D. E., and S. Zaheer. 2009. The multinational enterprise as an organization. In The Oxford handbook of international business, ed. A. Rugman, 341-366. 2nd ed. New York: Oxford University Press.
75. Wetherill, G. B. 1986. Regression analysis with applications. London: Chapman and Hall.
76. World Economic Forum. 2008. Global Competitiveness Report 2008-2009. http:// www.weforum.org/en/initiatives/gcp/Global%20Competitiveness%20Report/ PastReports/index.htm (accessed November 2, 2009). Geneva: Author.
77. Wright, M., I. Filatotchev, R. E. Hoskisson, and M. W. Peng. 2005. Strategic manage- ment research in emerging economies: Challenging the conventional wisdom. Journal of Management Studies 42 (1): 1-33.
78. Xu, D., and O. Shenkar. 2002. Institutional distance and multinational enterprise. Academy of Management Review 27 (4): 608-618.
79. Xu, D., Y. Pan, and P. W. Beamish. 2004. The effect of regulative and normative dis- tances on MNE ownership and expatriate strategies. Management International Review 44 (3): 285-307.
80. Yiu, D., and S. Makino. 2002. The choice between joint venture and wholly owned subsidiary: An institutional perspective. Organization Science 13 (6): 667-683.
81. Zaheer, S. 1995. Overcoming the liability of foreignness. Academy of Management Journal 38 (2): 341-363.
82. Zaheer, S. 2002. Liability of foreignness, redux: A commentary. Journal of International Management 8 (3): 351-358.
83. Zweynert, J., and N. Goldschmidt. 2006. The two transitions in Central and Eastern Europe as processes of institutional transplantation. Journal of Economic Issues 40 (4): 895-918.