International experience and FDI location choices of Chinese firms: The moderating effects of home country government support and host country institutions

We examine the extent to which Chinese government support of foreign direct investment (FDI) projects and host country institutional environments interact with prior entry experience by Chinese firms, and how this interrelationship affects FDI undertaken by Chinese firms. We hypothesize that home country government support and well-established host country institutions enhance organizational capabilities to take risks in FDI. As such, they reduce the need to accumulate experiential knowledge and capabilities relating to entering host countries based on prior entry experience in a particular country when undertaking follow-up investment projects. Using a unique, hand-collected panel data set of Chinese publicly listed firms during 2002–2009, we find that home government support and well-developed host country institutions reduce the importance of prior entry experience and significantly increase the likelihood of FDI entry into a host country. Further, from our subsample analyses we identify differences between entering developed and developing host countries in terms of the impact of home country government support and quality of host country institutions. Our findings help explain the puzzle concerning why emerging economy firms have rapidly internationalized in a short period of time and do not follow the pattern predicted by classical IB theories

Network centrality and organizational aspirations: A behavioral interaction in the context of international strategic alliances

Whereas social network analysis has been associated with organizational aspirations, little is known on how firm's structural positioning, and particularly network centrality, affects organizational aspirations to engage in international strategic alliances (ISA). This study examines the impact of network centrality on firm's internationalization behavior within the ISA domain in response to the performance-aspiration gap. We build on social and behavioral perspectives to predict that network centrality and performance-based aspirations will be associated with the number of ISA the firm engages in. Using a sample of 7760 alliance collaborations from the top 81 global pharmaceutical firms for the period of 1991-2012, we find supporting evidence for most of our arguments

Risk propensity in the foreign direct investment location decision of emerging multinationals

A distinguishing feature of emerging economy multinationals is their apparent tolerance for host country institutional risk. Employing behavioral decision theory and quasi-experimental data, we find that managers’ domestic experience satisfaction increases their relative risk propensity regarding controllable risk (legally protectable loss), but decreases their tendency to accept non-controllable risk (e.g., political instability). In contrast, firms’ potential slack reduces relative risk propensity regarding controllable risk, yet amplifies the tendency to take non-controllable risk. We suggest that these counterbalancing effects might help explain observation that risk-taking in FDI location decisions is influenced by firm experience and context. The study provides a new understanding of why firms exhibit heterogeneous responses to host country risks, and the varying effects of institutions

Problematizing fit and survival: transforming the law of requisite variety through complexity misalignment

The law of requisite variety is widely employed in management theorizing and is linked with core strategy themes such as contingency and fit. We reflect upon requisite variety as an archetypal borrowed concept. We contrast its premises with insights from the institutional literature and commitment literature, draw propositions that set boundaries to its applicability, and review the ramifications of what we call “complexity misalignment.” In this way we contradict foundational assumptions of the law, problematize adaptation- and survival-centric views of strategizing, and theorize the role of human agency in variously complex regimes

Cultural Distance and Firm Internationalization:A Meta-Analytical Review and Theoretical Implications

This paper presents the most comprehensive review and meta-analysis of the literature on cultural distance and firm internationalization to date. We analyze the effects of cultural distance on key strategic decisions throughout the entire process of internationalization. For the preinvestment stage, we examine the decisions on where to invest (location choice), how much to invest (degree of ownership), and how to organize the foreign expansion (entry and establishment mode). For the postinvestment stage, we examine the decisions of how to integrate the foreign subsidiary into the organization (transfer of practices) as well as the performance effects of cultural distance at both the subsidiary and the firm level. We find that firms are less likely to expand to culturally distant locations but if they do, they prefer greenfield investments and integrate subsidiaries more through transfer of management practices. Cultural distance does not seem to affect how much capital firms invest and whether they enter through a joint venture or full ownership. Interestingly, cultural distance has a strong negative effect on subsidiary performance but no effect on the performance of the whole multinational company. In addition, we find that the effects of cultural distance are not sensitive to time, but they are sensitive to the cultural framework used (e.g., Hofstede vs. Global Leadership and Organizational Behavior Effectiveness) and the home country of the company (developed vs. emerging market). Based on our study, we feel confident to offer some theoretical insights, recommendations for improving the validity and reliability of cultural-distance research, and ideas for future research

Regulator Vulnerabilities to Political Pressure and Political Tie Intensity: The Moderating Effects of Regulatory and Political Distance

This study applies the institution-based view and neo-institutional theory in addressing how managerial perceptions of regulator vulnerabilities to political pressure, and institutional distance, influence intensification of political ties. Our analysis of 181 wholly owned foreign subsidiary (WOFSs) operating in the Philippines suggests that managerial perceptions of regulator vulnerability to political pressures positively enhance the intensification of political ties. Our results also reveal that regulatory distance and, more importantly, the simultaneous presence of political and regulatory distance diminish the positive relationship between managerial perceptions of regulator vulnerability to political pressures and a WOFS’s propensity to enhance the intensification of political ties. Managerial implications and future research directions are discusse