Ownership in cross-border acquisitions and the role of government support

Pinto, Cláudia Frias; Ferreira, Manuel Portugal; Falaster, Christian; Fleury, Maria Tereza Leme; Fleury, Afonso

doi:10.1016/j.jwb.2016.08.004

Cited by 84 publications

(96 citation statements)

References 50 publications

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“…Institutional distance has been described as 'the extent of similarity or dissimilarity between the formal or regulative and the informal or normative and cognitive aspects of institutions of any two countries' (Gaur & Lu, 2007: 87-88). Institutional dissimilarities between home and host countries are sources of uncertainty, information asymmetry, organizational and administrative costs, and risky relationships with local institutions (Pinto, Ferreira, Falaster, Fleury, & Fleury, 2017). Hence, greater institutional distance increases the costs of doing business in a foreign country, because of the lack of familiarity with the local environment (Zhang & Xu, 2017).…”

Section: Institutional Distance and Government Official Visitsmentioning

confidence: 99%

Host country experience, institutional distance and location choice of Chinese MNEs

Quer

García

Andreu

et al. 2019

CCSM

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Purpose The conventional wisdom suggests that the lack of prior host country-specific experience and a higher institutional distance deter multinational enterprises (MNEs) from entering a foreign country. However, past studies report that Chinese MNEs show an unconventional risk-taking behavior choosing foreign locations, where they have no prior experience or there is an increased institutional distance. Drawing on the institutional theory, the purpose of this paper is to argue that Chinese Government official visits to the host country may act as a risk-reduction device, thus providing an explanation for such an unconventional behavior. Design/methodology/approach The authors develop two hypotheses regarding how Chinese Government official visits moderate the impact of host country-specific experience and institutional distance on the location choice of Chinese MNEs. The authors test the hypotheses using a sample of investment location decisions by Chinese MNEs in Latin America. Findings The authors find that government official visits mitigate the lack of firm’s prior host country experience. However, only high-level government visits reduce institutional distance. Originality/value The authors contribute to the international business literature by analyzing how home country government diplomatic activities may pave the way of host country institutional environment for foreign MNEs from that home country. In addition, the authors provide an additional explanation for the unconventional risk-taking behavior of Chinese MNEs. Finally, the authors also contribute to a better understanding of the decision-making process of emerging-market MNEs entering other emerging economies.

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Section: Institutional Distance and Government Official Visitsmentioning

confidence: 99%

Host country experience, institutional distance and location choice of Chinese MNEs

Quer

García

Andreu

et al. 2019

CCSM

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show abstract

“…Chinese Government implements the "go global" policy, providing export subsidies, tax rebates, foreign exchange assistance and other support to stimulate firms' internationalization (Hong et al, 2015). Pinto et al (2017) also found that government financial support (subsidies, low interest loans) is important for LAC countries to expand abroad. For example, Brazil's Government used its financial institutions, such as state-owned banks and development banks, to support Brazilian multinational corporations' (MNCs) internationalization.…”

Section: Summary Of Government Roles On Corporate Entrepreneurship Acmentioning

confidence: 99%

Corporate entrepreneurship of emerging market firms: current research and future directions

Demirkan

Yang

Jiang

2019

NEJE

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Purpose The purpose of this paper is to examine the current state of corporate entrepreneurship (CE) of emerging market firms (EMFs) and provide direction for future research on the topic. Design/methodology/approach The authors specifically review the recent literature between the years 2000 and 2019 on CE with the keywords “corporate entrepreneurship,” “emerging economies” and “emerging countries” published in the Australian Business Deans Council list journals. The authors review the existing literature about CE in emerging markets, summarize current achievements and present an agenda for future research. Findings Based on the review, the authors categorized the macro and micro contexts of CE and summarized the current articles on CE in emerging markets within each macro and micro context. The authors conclude that despite the abundance of research on CE that investigates the three prongs of CE in terms of innovation, strategic renewal and new venturing in developed market contexts, there is a scarcity of literature that focuses on CE in emerging markets from a holistic perspective. Originality/value While there is an abundance of literature review on CE in general in terms of the drivers of the construct, the contexts contributing to it and the outcomes, the reviews are lacking about CE specifically within the context of emerging markets. Emerging markets vary from developed markets institutionally, economically, culturally, socially and technologically. However, the questions of how these differences impact the CE activities, as it relates to innovation, venturing and strategic renewal in EMFs, and how these differences provide incentives or hinder the activities that contribute to CE remain mostly unanswered. This paper reviewed the research on CE and emerging market contexts from 2000 to present. It targets to provide a better understanding of the current achievement on this topic and what to be done in the future.

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“…The traditional response of the theory would be that they will tend to avoid territories with more dissimilar institutions, institutionally less sophisticated environments than its domestic market, and to seek partnerships as a way to better learn about the institutional framework in a country of destination. Evidence, however, indicates that Brazilian multinationals invest in other countries as the main mode of expansion and resort little to partnerships where they do not have at least control of operations (PINTO et al, 2017). Thus, there is still much to be understood about how Brazilian firms react to institutional differences in their internationalization and how the selection of markets can be driven by the motivations.…”

Section: Discussion and Final Considerationsmentioning

confidence: 99%

The impact of CAGE institutional distances and motivations for internationalization on the Brazilian foreign direct investment outflows

Ferreira¹,

Falcão²

2019

BBR

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In this study, we have analyzed the influence of institutional distances and strategic motivations for internationalization on Brazilian foreign direct investment (FDI). We suggest that institutional differences, between Brazil and the host country, measured with Ghemawhat's (2001) CAGE typology, have a negative impact on FDI flows. However, we propose that the market-seeking and strategic asset-seeking motivations (e.g., new knowledge acquisition) moderate the impact of institutional differences on investment decisions by reducing the impact of the institutional distances between countries on investment decisions.

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Ownership in cross-border acquisitions and the role of government support

Cited by 84 publications

References 50 publications

Host country experience, institutional distance and location choice of Chinese MNEs

Host country experience, institutional distance and location choice of Chinese MNEs

Corporate entrepreneurship of emerging market firms: current research and future directions

The impact of CAGE institutional distances and motivations for internationalization on the Brazilian foreign direct investment outflows

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