SME foreign market entry mode choice and foreign venture performance: The moderating effect of international experience and product adaptation

Firms’ foreign market entry mode choice attracts considerable research attention. However, the performance implications of this choice remain inconclusive, particularly in the context of small and medium-sized enterprises (SMEs). The present paper draws on the resource-based view (RBV) and develops a theoretical model specifically tailored to the context of SMEs in order to study the relationship between entry mode choice and foreign venture performance. Testing hypotheses on 133 German SMEs, we show that international experience as a resource and product adaptation as a capability improve the performance of non-equity entry modes by mitigating liabilities of smallness inherent to SMEs. We furthermore find empirical support for the joint moderating effect of international experience and product adaptation on the focal relation. Our findings contribute to the SME foreign market entry mode literature and have implications for practitioners and future research.     

The moderating effect of bilateral investment treaty stringency on the relationship between political instability and subsidiary ownership choice

We investigate whether the degree to which a bilateral investment treaty (BIT) protects against expropriation (i.e., its “stringency”) influences the international strategy of multinational enterprises (MNEs) as they invest in countries with varying levels of political instability. We draw on institutional logic and insights from political economics to hypothesize that BIT stringency will moderate the established positive relationship between host country political instability and minority ownership. Analysis of a sample of 289 foreign investments made by AEX-listed Dutch MNEs in 34 countries between 2004 and 2013 provides support: a more stringent BIT will encourage the MNE to choose a majority stake as political instability rises. Robustness tests provide further support for our argument. The results have both managerial and policy implications relating to the role that BIT stringency plays in determining MNE strategy.     

Entry mode diversity and closing commercial deals with international customers: The moderating role of advanced servitization

As the importance of servitization and service-augmented solution delivery grows into a mainstream phenomenon for manufacturers, offering theoretically founded avenues to solve their specific internationalization challenges is necessary. The study addresses the internationalization paradox faced by servitized manufacturers generated by the specific hybrid nature of their product-service offering. As such, this research is meant to understand the entry mode diversity for the internationalization of advanced servitization providers. Our primary research deal-level data follows 1885 potential sales negotiations for servitized products closed in 2018 by a Poland-based multinational high-tech optics firm offering product-service systems. The results of the study support the idea that manufacturers of advanced servitization could benefit from the implementation of entry mode diversity. It is found that the sales deal success when entry mode diversity is implemented in a foreign market is positively moderated when knowledge-intensive advanced servitization is included in the negotiation.     

Actualization of growth potential in international joint ventures: The moderating effects of localization strategies

We employ the growth options perspective to examine how multinational corporations’ localization strategies facilitate the actualization of growth potential preserved in international joint ventures (IJVs). This study uses a data of Korean IJVs; it accounts for the endogeneity associated with a firm’s decision to exercise growth options through a two-stage model. We find that the enlarged IJVs, via conversion to majority ownership under reduced host market demand uncertainty, performed better. We also find that the realized growth potential are larger for IJVs that have more local business ties with other firms, or that hire more local employees. This study contributes to the growth options literature by examining the strategies that enable firms to exploit evolved exogenous uncertainty, and thus actualize upside growth potential.     

Earliness of internationalization and performance outcomes: Exploring the moderating effects of venture age and international commitment

This study examines the impact of early foreign market entry on new ventures’ performance outcomes. Venture age and international commitment are theorized as moderators to address the inconsistent findings of previous research surrounding the performance implications of early internationalization. Results from a sample of international new ventures in China found that the earliness of internationalization positively contributes to firm performance in terms of sales growth, but not innovation and profitability. The performance advantage of early internationalization becomes obsolete as young ventures become mature, especially among those with a low level of international commitment. This study highlights the importance of incorporating time-based dimensions of international venturing for a better understanding of the performance implications of early internationalization.     

Divergent diffusion: Understanding the interaction between institutions,firms, networks and knowledge in the international adoption of technology

Why do certain technologies diffuse globally while others spread only within certain areas of the world? I analyze the uneven process of international technology diffusion by focusing on how institutions moderate the impact of firm, network, and knowledge characteristics on the adoption of technology. The study shows that better economic institutions lower transformation costs; that similarities across social institutions minimize transmission costs; and that effective political institutions reduce transaction costs for technology diffusion. The impact of each institution-type on the diffusion process is based on the relative weight of the three different knowledge dimensions embedded in the technology. Complex technologies are most affected by economic institutions; tacit technologies are most dependent on social institutions; and systemic technologies are most influenced by political institutions.     

Revisiting the relationship between product and international diversification in new ventures: The moderating effect of effectuation processes

This study examines the relationship between product and international diversification in new ventures, suggesting effectuation processes to be key moderators of this relationship. Effectuation processes allow young firms to attenuate constraints imposed by the liabilities of newness, the uncertainty and the lack of prior diversification experience these firms face and which may significantly restrict the number of growth opportunities they can jointly exploit in the short run. Specifically, the findings indicate that reliance on experimentation, maintenance of flexibility and securement of pre-commitments positively moderate the relationship between product and international diversification in new ventures. From all effectuation processes, only the adoption of the affordable loss principle lacks a significant effect on the link between the two growth strategies. Theoretical and empirical implications are further discussed.     

SMEs international growth: The moderating role of experience on entrepreneurial and learning orientations

New and small firms operating in the high-tech environments need strong entrepreneurial (EO) and learning (LO) orientations to enhance international growth. Yet, the relationship between these two key strategic dimensions and foreign growth can be contingent to the entrepreneur’s individual characteristics. Bringing together elements from strategic management, organization and entrepreneurship literatures, we employ a dynamic temporal perspective considering two levels of analysis, the firm and the entrepreneur, and we apply a fixed effects pooled time-series regression on a sample of 170 firms in two periods of time (2005 and 2015). Our findings indicate that SMEs that possess greater EO and LO have higher international growth. However, previous entrepreneurial and industry-specific managerial experience of the founder/CEO positively exert their effect on these relationships. Our results have important theoretical and practical implications for entrepreneurs and policy makers operating in highly innovative sectors.     

The influences of governance quality on equity-based entry mode choice: The strengthening role of family control

This study examines the possible heterogeneity of governance quality's influence on entry mode decisions made by firms with different degrees of family control. When entering a country with low governance quality, ceding control of the subsidiary in exchange for local partners’ help enables foreign firms to tackle institutional flaws. However, such a motivation diminishes as governance quality increases. This study thus hypothesizes that firms tend to choose WOSs over JVs when entering a host country with high governance quality.Firms controlled by family members, due to concerns regarding the preservation of socioemotional wealth, prefer to maintain high ownership levels of their affiliates. This study thus hypothesizes that firms with a higher degree of family control are even more likely to choose WOSs when entering a country with high governance quality. The results support the hypotheses.     

Exploring the influence of resource environments on absorptive capacity development: The case of emerging market firms

Research recognizes that emerging market firms (EMFs) have relatively underdeveloped absorptive capacity. Yet, scarce attention has been paid to the conditions that constrain or facilitate EMFs’ absorptive capacity development. In this article, we explore how differences in home country resource environments influence EMFs’ absorptive capacity. We suggest that home country institutions and factor markets influence EMFs’ choice among three learning strategies: duplicative imitation, creative imitation, and innovation. Building on the organizational learning perspective, we then explore how learning strategies of EMFs’ from different emerging economies influence their preferences with respect to sources of new knowledge, and consequently the implications of these strategic choices for their absorptive capacity.     

供应商专项投资与感知的合作风险:关系发展阶段与控制机制的调节作用研究

This study examines the dynamic nature of suppliers’ perceived relational risks arising from transaction-specific investments (TSIs) in their relationship with manufacturers, and the moderating effects of contracts and relational norms, during the developmental process of manufacturer-supplier relationship. An empirical study was conducted with data collected from 261 suppliers and manufacturers in the Chinese consumer electronic appliances sector. We found that suppliers’ TSIs have a positive effect on their perceived relational risks, and in different phases of a relationship effect varies significantly. Results of the research also show that both contracts and relational norms have negative moderating effects on the relationship between suppliers’ TSIs and their perceived relational risks, and moderating effects during are different across various phases of a relationship. Translated from Zhongguo Guanli Kexue 中国管理科学 (Chinese Management Science), 2006, 14(1): 30–36