A transaction cost perspective on foreign market entry strategies of US and Japanese firms

Abstract

A large scale survey of top US and Japanese executives is conducted in order to assess the power of transaction cost economics (TCE) in explaining a firm's choice of entry mode (e.g., joint venture vs. full ownership) when it enters a foreign market. Results suggest that several TCE tenets are useful in explaining US firms' choice of entry mode. However, TCE predictions were not supported by the entry mode choices of Japanese firms. Implications of these findings for researchers and managers are discussed. (B 1998 John Wiley

Transaction Cost Economics: An Assessment of Empirical Research in the Social Sciences

“…The authors find that asset specificity is positively related to the use of an integrated channel. Similar results are found in Taylor, et al (1998), and Eramilli and Rao (1993), and Rialp, et al (2002) arrives at analogous results from a large sample of Spanish exporters. An interesting application of transaction cost analysis in this area is Klein and Roth (1993), who find that the level of firm satisfaction with the marketing channel is related to the uncertainty and monitoring aspects of the associated transactions.…”

Hofstede, Schwartz, or managerial perceptions? The effects of different cultural distance measures on establishment mode choices by multinational enterprises

“…However, several authors suggest the use of individuallevel perceptual measures to assess cultures and cultural differences, because managers' perceptions drive their strategic decisions and behavior (Boyd, Dess, & Rasheed, 1993;Johanson & Vahlne, 1977;O'Grady & Lane, 1996;Shenkar, 2001;Sullivan & Bauerschmidt, 1990;Zhao, Luo, & Suh, 2004). Nevertheless, only few empirical studies have examined the impact of perceptual cultural distance measures on foreign entry mode choices by MNEs and on the success of their foreign subsidiaries (Bell, 1996;Evans & Mavondo, 2002;Kim & Hwang, 1992;Meschi & Roger, 1994;Mjoen & Tallman, 1997;Taylor, Zou, & Osland, 1998). Evans and Mavondo (2002), for example, asked respondents to indicate on a 7-point Likert scale the extent to which the country entered by their firm differed from their firm's home country on each of Hofstede's dimensions of national culture.…”

Testing Organizational Economics Theories of Vertical Integration

“…(ii) Human capital specificity: Anderson (1985), Anderson and Coughlan (1987), Anderson and Schmittlein (1984), Armour and Teece (1980), Cavanaugh (1998), Coff (2003), Eramilli and Rao (1993), John and Weitz (1988), Klein (1989). Klein, Frazier, and Roth (1990), Masten et al (1989Masten et al ( , 1991, Masters and Miles (2002), Monteverde (1995), Monteverde and Teece (1982), Taylor, Shaoming, and Osland (1998), and Zaheer and Venkatraman (1995). (iii) Physical (dedicated) asset specificity: Bindseil (1997), Caves and Bradburd (1988), Globerman and Schwindt (1986), Heide and John (1988), Levy (1985), Lieberman (1991), MacDonald (1985, MacMillan et al (1986), Masten (1984), Monteverde and Teece (1982), Ulset (1996), and Weiss (1992Weiss ( , 1994.…”