Entry and access to competencies abroad: Emerging market firms versus advanced market firms

Beule, Filip De; Elia, Stefano; Piscitello, Lucia

doi:10.1016/j.intman.2013.05.002

Cited by 90 publications

(69 citation statements)

References 71 publications

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“…With respect to firm heterogeneity, our estimation confirms that MNEs from emerging countries prefer partial acquisitions that allow them to maintain a local partner (De Beule, Elia and Piscitello forthcoming); in particular, the Emerging variable demonstrates a positive and significant coefficient (at p < 0.01). This preference most likely reflects the phenomenon that these MNEs are using these partial acquisitions to reduce their liabilities of foreignness and origin (Mathews ).…”

Section: Resultssupporting

confidence: 58%

Local Externalities and Ownership Choices in Foreign Acquisitions by Multinational Enterprises

2013

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This article assesses the influence of spatial heterogeneity on the entry mode by multinational enterprises (MNEs) in foreign markets. Focusing on acquisitions, we claim that the location of the target firm influences the MNE's ownership choice. MNEs normally execute partial acquisitions to reduce their liability of foreignness and to preserve their target's inherent competencies, particularly in highly innovative and internationally competitive sectors. However, this phenomenon occurs less frequently if target firms are located in areas that are characterized by relevant externalities, such as core cities and industrial districts. In particular, core cities allow foreign MNEs to access a variety of information and knowledge as well as other externalities that are associated with international interconnectedness; industrial districts provide MNEs with easier access to industry‐specific agglomeration economies (a local pool of skilled labor, local input‐output linkages, and local knowledge spillovers). These locations provide substitutes for different aspects of the target firm's competences, thus reducing an MNE's need to maintain a local partner. Empirical evidence from foreign acquisitions of local manufacturing firms that occurred in Italy during the 2001–10 period confirms these expectations.

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Section: Resultssupporting

confidence: 58%

Local Externalities and Ownership Choices in Foreign Acquisitions by Multinational Enterprises

2013

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“…Next, we controlled for the effects of several target firm characteristics, which may influence CBA ownership decisions. Specifically, we captured if there was government ownership in the target firm (Kedia & Bilgili, ; Uhlenbruck & De Castro, ), if the target firm operated in an extractions industry given the importance of mining and oil and gas exploration to the economy of African nations (Zhang, Zhou, & Ebbers, ), if the target firm operated in a high‐tech industry (De Beule et al, ; Malhotra & Gaur, ), and if the target firm used an advisor (Ertugul, ). These variables were coded 1 when the respective conditions were met and 0 otherwise.…”

Section: Methodsmentioning

confidence: 99%

“…Therefore, institutional differences may play important roles in the tradeoffs between different ownership positions in the context of CBAs. Not surprisingly then, a growing literature has begun to identify institutional determinants of ownership position in CBAs, in an effort to explain why and when firms choose partial versus complete ownership (Arslan & Wang, ; M. D. Chari & Chang, ; Chen, ; Chen & Hennart, ; Contractor, Lahiri, Elango, & Kundu, ; De Beule, Elia, & Piscitello, ; Kedia & Bilgili, ; Lahiri, Elango, & Kundu, ; Malhotra & Gaur, ; Malhotra, Sivakumar, & Zhu, ).…”

Section: Introductionmentioning

confidence: 99%

Institutional determinants of ownership positions of foreign acquirers in Africa

Ellis

Lamont

Holmes

et al. 2017

Global Strategy Journal

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Research summary Using unique features of the African context and blending institutional, hostage, and transaction cost theories, we address gaps in our understanding of institutional determinants of ownership position in cross‐border acquisitions (CBAs) in emerging countries. We focus on two traditional institutional determinants: Informal and formal institutional distances between the two firms’ home countries and two determinants that are particularly acute in the African context: the colonial ties between and fractionalization of the two firms’ home countries. We find colonial ties and uncertainty avoidance distance, an indicator of informal institutional distance, are negatively related to ownership position. Conversely, we show that formal institutional distance and the host country's fractionalization positively influence ownership levels, but the latter effect is weakened when acquirers come from more fractionalized home countries. Managerial summary We examine the effects of four institutional factors that influence organizational decision‐making in the African context: (a) its colonial history, (b) differences in informal cultural norms, (c) differences in formal regulatory structures, and (d) ethnic and linguistic diversity within a country on the percentage of equity ownership that foreign acquirers hold in African target firms. Results indicate that this equity position is lower when colonial ties and greater differences in uncertainty avoidance exist between the acquirer's home country and the target African country. Conversely, foreign acquirers’ equity ownership positions are higher when there are greater formal regulatory differences between the two countries and the host country is more ethnically and linguistically diverse, though the latter effect is reduced when the acquirer is from a home country that is also diverse.

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“…For instance, regarding the measurement, some use the World Bank's governance indicators (Gallego and Casillas ), others draw on the Economic Freedom Index (De Beule et al . ), yet others develop their own items (Chiao et al . ).…”

Section: Which Distance?mentioning

confidence: 97%

“…Across the articles, the number, the type and the operationalizations of intrinsic characteristics used to proxy institutional distance differ greatly. For instance, regarding the measurement, some use the World Bank's governance indicators (Gallego and Casillas 2014), others draw on the Economic Freedom Index (De Beule et al 2014), yet others develop their own items (Chiao et al 2010). Moreover, different authors have used identical measures for conceptually different intrinsic characteristics.…”

Section: Dimensions Of Distancementioning

confidence: 99%

The Concept of Distance in International Business Research: A Review and Research Agenda

Hutzschenreuter

Kleindienst

Lange

2015

Int J Management Reviews

135

102

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This paper reviews the literature on the effects of distance arising from country differences on outcomes at the firm and subsidiary level. It provides some clarity on what has been learned so far about distance by answering four questions: Which distance? Why does distance matter? What outcomes are affected by distance? and What aggravates or alleviates the effects of distance? Based on the review of the literature, a set of future research suggestions are developed, intended to direct attention to research questions that the authors believe are among the most pressing questions in distance research and that may have the potential to advance the field substantially.

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Entry and access to competencies abroad: Emerging market firms versus advanced market firms

Cited by 90 publications

References 71 publications

Local Externalities and Ownership Choices in Foreign Acquisitions by Multinational Enterprises

Local Externalities and Ownership Choices in Foreign Acquisitions by Multinational Enterprises

Institutional determinants of ownership positions of foreign acquirers in Africa

The Concept of Distance in International Business Research: A Review and Research Agenda

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