Cultural distance, political risk, or governance quality? Towards a more accurate conceptualization and measurement of external uncertainty in foreign entry mode research

Slangen, Arjen; Tulder, R.J.M. van

doi:10.1016/j.ibusrev.2009.02.014

Cited by 281 publications

(212 citation statements)

References 66 publications

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“…Nem sempre a escolha de modo de entrada pode ser tomada livremente pela empresa, já que muitos governos impedem a participação majoritária de capital estrangeiro em indústrias consideradas estratégicas (Slangen & Tulder, 2009;Xu & Shenkar, 2002). Quando a empresa tem liberdade para decidir o nível de propriedade desejado, variáveis do ambiente institucional do país hospedeiro podem afetar essa decisão, levando a escolha a pender para subsidiárias integrais ou para joint ventures.…”

Section: Impacto De Fatores Institucionais Sobre O Modo De Entradaunclassified

Teoria Institucional E Modos De Entrada De Multinacionais De Países Emergentes

Rocha

Ávila²

2015

Rev. adm. empres.

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RESUMOEste ensaio teórico busca analisar os espaços de contribuição da perspectiva institucional de análise para o entendimento das escolhas de modo de entrada de empresas multinacionais provenientes de países emergentes. Modos de entrada referem-se às decisões de grau de controle da subsidiá-ria (subsidiária integral versus joint venture). Alguns autores propõem que o modo de entrada seria influenciado pelas três dimensões do ambiente institucional: distância regulatória, normativa e cultural-cognitiva entre o país hospedeiro e o país de origem da empresa investidora. A partir de ampla revisão bibliográfica, são identificados fatores relacionados aos três pilares do ambiente institucional e formuladas proposições para orientar estudos empíricos futuros sobre modos de entrada de multinacionais de países emergentes.PALAVRAS-CHAVE | Institucionalismo, modos de entrada, multinacionais, distância institucional, paí-ses emergentes. ABSTRACT This essay aims at contributing to the analysis of the spaces for contribution of the institutional perspective of analysis to advance the understanding of entry mode choices by multinational firms from emerging markets. Entry modes refer to the decisions involving the degree of control of a subsidiary (wholly-owned versus joint venture). Some authors propose that three dimensions of the institutional environment influence the entry mode decision: regulative distance, normative distance and cultural--cognitive distance between the host country and the country of origin of the investing firm. Starting from a broad review of the extant literature, this study identifies factors related to the three pillars of the institutional environment and advances propositions to be tested in future studies on entry mode choices of emerging market multinationals. KEYWORDS | Institutionalism, entry modes, multinationals, institutional distance, emerging countries. RESUMEN Ese ensayo teórico busca analizar los espacios de contribución de la perspectiva institucional de aná-lisis para el entendimiento de las elecciones del modo de ingreso de empresas multinacionales provenientes de países emergentes. Modos de ingreso se refieren a las decisiones de grado de control de la subsidiaria (subsidiaria integral versus joint venture RAE-Revista de Administração de Empresas | FGV-EAESP

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Section: Impacto De Fatores Institucionais Sobre O Modo De Entradaunclassified

Teoria Institucional E Modos De Entrada De Multinacionais De Países Emergentes

Rocha

Ávila²

2015

Rev. adm. empres.

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“…Finally, we clearly focus on cultural distance as a source of uncertainty (Slangen & van Tulder, 2009) since it complicates the verification of claims of both external (e.g., customers, suppliers, partners) and internal (e.g., employees) stakeholders. Moreover, Lee, Shenkar, andLi (2008: 1117) emphasized that scholars have insufficiently differentiated between the Bchallenge of working in a foreign environment^and the Bchallenge of working with a foreign partner,^which is reflected in our differentiation between just working in such foreign environment (WoS) and also working with a foreign partner (IJV).…”

Section: Call the Bextent Of Control^and Thementioning

confidence: 99%

“…In particular, we suggest that cultural distance affects uncertainty with different implications for the type of ownership mode-given that cultural differences complicate the verification of claims of stakeholders. Previous studies indicate that the distribution of external and internal uncertainties is different in the respective ownership modes when confronted with cultural distance (Slangen & van Tulder, 2009). With regard to agency theory, uncertainty arises, when a principal (here the HQ) cannot accurately assess the agent's (here the subsidiary) performance (Anderson & Gatignon, 1986).…”

Section: The Moderating Effect Of Cultural Distancementioning

confidence: 99%

“…Prior research suggests that WoS are associated with higher environmental uncertainty stemming from cultural distance than IJVs (Anderson & Gatignon, 1986;Brouthers & Brouthers, 2001;Gatignon & Anderson, 1988;Root, 1987;Slangen & van Tulder, 2009). With high cultural distance, WoS are embedded in an environment that substantially differs in terms of social norms and values from the home country of the parent firm.…”

Section: The Moderating Effect Of Cultural Distancementioning

confidence: 99%

“…The reason is that the local partner in an IJV can provide tacit knowledge about the host country's social norms and values and, in particular, about the behavior patterns of local stakeholders (Slangen & van Tulder, 2009). The effect of cultural distance here has a different relational mechanism than argued for WoS.…”

Section: The Moderating Effect Of Cultural Distancementioning

confidence: 99%

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Ownership mode, cultural distance, and the extent of parent firms’ strategic control over subsidiaries in the PRC

et al. 2016

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Previous studies often associated a specific type of ownership mode with the extent of control a parent firm may have over (strategic) decision-making in a foreign subsidiary, suggesting that parent firms should have higher control over wholly-owned subsidiaries (WoS) than international joint ventures (IJVs). Building on principal agent theory, we argue that in the Chinese context higher ownership levels do not necessarily have a positive effect on the extent of control over the foreign subsidiary. We further argue that cultural distance between the parent firm and the subsidiary moderates this relationship. We test our hypotheses using data from a sample of 156 foreign subsidiaries in the People's Republic of China (PRC) and find strong support for our arguments. Our findings show that in WoS parent firms reduce their extent of control, while in IJVs parent firms increase their extent of control. Moreover, we find that extent of control over WoS (IJVs) declines (increases) when cultural distance increases. Our results have significant theoretical implications for international business (IB) research as they challenge existing views with regard to the relationship between ownership mode and control as well as the moderating effect of cultural distance.

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Shareholders' environmental profile and its impact on firm's environmental proactivity: An institutional approach

2020

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Theorists and practitioners still argue about different shareholders' environmental preferences. Drawing on various processes of institutional theory such as deinstitutionalization and defensive institutionalism, we test the differences between foreign and national shareholders' influences on firms' environmental proactivity. Specifically, we focus on the country of origin of the dominant shareholders and the environmental culture of the countries of origin of the shareholders. Using unbalanced panel data from between 2006 and 2017, which includes 12,527 observations of 1532 different firms from 11 economic sectors and across 23 countries, our results show that foreign shareholders are more prone to modifying existing environmental practices, whereas national shareholders may accept them, despite being reluctant to implement such changes. We make a contribution by showing that the deinstitutionalization forces coming from foreign shareholders are stronger than the defensive institutionalism efforts of national shareholders. However, such forces are not always the best options for sustainability.

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Cultural distance, political risk, or governance quality? Towards a more accurate conceptualization and measurement of external uncertainty in foreign entry mode research

Cited by 281 publications

References 66 publications

Teoria Institucional E Modos De Entrada De Multinacionais De Países Emergentes

Teoria Institucional E Modos De Entrada De Multinacionais De Países Emergentes

Ownership mode, cultural distance, and the extent of parent firms’ strategic control over subsidiaries in the PRC

Shareholders' environmental profile and its impact on firm's environmental proactivity: An institutional approach

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