| The Foreign Market Servicing Behavior of Large Multinational Corporations: An Empirical Investigation |
| | Craig, Jane F. | U. of New South Wales | j.craig@agsm.edu.au | 612 9931 9359 |
| | This paper classifies a set of the world's largest multinational corporations (MNCs) according to the strategic choice they make about servicing foreign markets: the three
generic international strategies proposed here are global exporter, foreign producer and mixed mode. A fourth category includes firms with low levels of both exporting
and foreign production. Applying this categorization schema focuses attention on a relatively neglected aspect of international strategy at the firm level.
The classificatory analysis shows that almost a quarter (24.8%) of the 443 MNCs pursue a foreign producer strategy. However, dominant models of internationalization
devote little descriptive or normative attention to managing such firms. Accordingly, the findings here suggest that a foreign production-centred firm strategy and its
attendant organizational requirements are material for a significant subset of MNC managers and thus warrant specific research attention. In addition to industry and
country effects, the findings also reveal significant within-industry variation in firm choice on this dimension of international strategy. As such, the research has
implications for the relative importance of models based on industry versus firm choice of position within an industry, and for stages models of internationalization. |
| | Keywords: international strategy; foreign market servicing,; multinational corporations |
| How Much Do Country, Industry And Firm Matter? A Meta-Analysis of Modes of Foreign Entry Decisions |
| | Bhattacharya, Mousumi | Syracuse U. | mbhattac@som.syr.edu | (315)-443-1040 |
| | A rich array of papers have studied the different modes of foreign entry used by multinational firms to enter foreign markets; but till date it is not clear which factors are most important in influencing this decision. A number of country-level, firm-level, and industry-level factors have been analyzed so far. This paper consolidates the modes of foreign entry literature in the International Business area through a quantitative meta-analysis, and compares the relative importance of various categories of factors in influencing this decision. It is seen that country- and firm-level factors have stronger effect than industry-level factors, though all are significant. Study findings also reveal that the consolidated effect-size of all categories of factors is small, leaving a large amount of unexplained variation. This seems to suggest that many major factors have not been studied so far and researchers should look into a broader set of factors other than those already studied. |
| | Keywords: Modes of Foreign Entry; Meta-Analysis |
| Entry Mode Selection During International Expansion: The Case of MNEs in an Emerging Market |
| | Luo, Yadong | U. of Hawaii | yadong@busadm.cba.hawaii.edu | (808)-956-7397 |
| | Emerging world economy dynamics and global competition patterns are now encouraging MNEs to expand into emerging economies. This study proposes and validates that entry mode selection in an emerging market is influenced by situational contingencies at four levels: country, industry, firm, and project. Analysis of data collected from China, the world's largest emerging market at present, suggests that the joint venture is preferred when perceived governmental intervention or environmental uncertainty is high or host country experience is low, and when risk-sharing MNEs are investing in an industry with high asset intensity. The wholly-owned entry mode is preferred when intellectual property rights are not well protected, the number of firms in the industry is growing fast, the need for knowledge protection or global integration is high, or the project is located in an open economic region. |
| | Keywords: Emerging Markets; Entry Mode; International Expansion |
| The Impact of Cultural and Geographic Distance, Country Experience and Multiple Sources of Technological competencies on the choice between foreign direct investment and technology licensing |
| | Fosfuri, Andrea | Universidad Carlos III, Madrid | fosfuri@emp.uc3m.es | 34-91-6249351 |
| | Arora, Ashish | Carnegie Mellon U. | ashish@andrew.cmu.edu | (412)-268-2192 |
| | Globalization has underlined the need for firms to exploit technological capabilities on a global scale. This study explores the determinants of the choice between technology licensing and foreign direct investment as a strategy for expansion abroad.
To underpin our main research questions, we rely on the contributions of both the "syncretic" theory of the entry modal choice, the transaction cost model and the Uppsala school.
Specifically, this paper attempts to address the following issues: - Do cultural barriers and geographic distance influence the choice between foreign direct investment and technology licensing? - Do firms learn from previous business practices in foreign countries? - How does the presence of other sources of technological competencies affect the entry modal choice?.
We test our hypotheses using a novel and extremely comprehensive database on worldwide plant level investment in the chemical industry during the 1980s.
After controlling for firm-, country- and technology-specific sources of variation, we find that cultural and geographic distance and multiple sources of technological competencies favor the use of licensing as a strategy for expanding abroad, whereas, prior experience favors the choice of foreign direct investment.
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| | Keywords: Technology licensing; Foreign direct investment; Chemical industry |