Order of entry and performance in international markets

The inter-market and intra-market orders of entry and their performance consequences are examined for an industrial product. First entrants consist typically of both multinational and local firms, while early followers are multinational firms, and later entrants are smaller, local firms. A strong order of entry-market share relationship is observed in international markets. First entrants and later entrants outsurvive early followers. The analysis reveals a strategy for achieving both first-entry into many markets and dominance within those markets. Simultaneous entry into multiple markets occurs infrequently and in mature stages of the product life-cycle.     

Acquisitions versus greenfield investments: international strategy and management of entry modes

This paper adds an important explanatory variable to the well‐established list of factors shown to influence the choice between foreign acquisitions and greenfield investments: the international strategy followed by the multinational company (MNC) in question. The MNC's international strategy is subsequently linked to the management of the two different entry modes by showing that differences in strategy are reflected in different headquarters—subsidiary relationships for acquisitions and greenfields. Some aspects of this relationship are also shown to change over time, a process that is mediated by the MNC's strategy. Copyright © 2002 John Wiley & Sons, Ltd.     

Foreign entrant survival and foreign market share: Canadian companies' experience in united states medical sector markets

We show that successful foreign market entry is related to the extent of foreign presence in an industry at the time of entry. Survival of 31 Canadian-based businesses that entered 24 U.S. medical sector markets between 1968 and 1989 tended to be somewhat longer in product markets in which foreign-based businesses held a moderate market share when the Canadian businesses entered than in low and high foreign share product markets. The result controls several other industry and business-level factors, including industry concentration, entry year, corporate size, related diversification, entry mode, and service sector status.     

Getting there in a global industry: Impacts on performance of changing international presence

We investigate the effects of increasing and decreasing international presence on market share and survival in the American medical diagnostic imaging equipment industry. Imaging equipment manufacturers possessing international medical operations tend to achieve superior market share and longer survival, but we find that attempting to become an international medical player is risky. Both increasing and decreasing international presence have negative associations with survival, while decreased internationalization is associated with decreased American market share. Brief case studies suggest that the ingredients for success in internationalization may include preparedness, focused management, and learning from international experience.     

Multipoint competition,strategic similarity and entry into geographic markets

The objective of this study is to integrate both multimarket contact and strategic similarity in the analysis of entry decisions. We also analyze the role of the reciprocity of contacts, market concentration, and coordination mechanisms at moderating the relationship. Our hypotheses are tested through the analysis of entry behavior into new geographical markets in the Spanish savings bank market. Interestingly, our results offer an opportunity of conciliating conflicting evidence in both the multimarket–mutual forbearance and the heterogeneity–rivalry literatures and offer further support to the U‐inverted influence of multimarket contact on entry. Given the coordination assumption implicit in the theory and the possible presence of unobservable variables, we also offer a method to cope with the common‐actor problem. Copyright © 2006 John Wiley & Sons, Ltd.     

Autonomy and dependence of international cooperative ventures: an exploration of the strategic performance of U.S. ventures in Mexico

Researchers have begun to view international cooperative ventures as complex, multiparty organizations in which foreign and local firms and the venture itself all have distinctive roles. This approach has important implications for the venture strategies of foreign firms in emerging economies. This study explores relationships between the resource contributions of parent firms and U.S. managers' assessment of venture performance in a sample of established U.S.–Mexican ventures. The research suggests that mature cooperative ventures are expected to achieve autonomy from parent firms in key areas at the same time that certain forms of strategic dependency also are important to success. Copyright © 2002 John Wiley & Sons, Ltd.     

FOREIGN ENTRY,CULTURAL BARRIERS,AND LEARNING

This paper examines the longevity of foreign entries. Hypotheses are developed on the mode (start-ups vs. acquisitions) and ownership structure (wholly owned vs. joint ventures) in relation to cultural distance. The hypotheses are tested within a framework of organizational learning, using data on 225 entries that 13 Dutch firms carried out from 1966 onwards. Results show that the presence of cultural barriers punctuates an organization's learning. Cultural distance is a prominent factor in foreign entry whenever this involves another firm, requiring the firm to engage in ‘double layered acculturation.’ We also identify locational ‘paths of learning.’ The longevity of acquisitions is positively influenced by prior entries of the firm in the same country. Similarly, the longevity of foreign entries, in which the firm has a majority stake, improves whenever the expanding firm engaged in prior entries in the same country and in other countries in the same cultural block.     

Financial performance and survival of multinational corporations in China

This study investigates the impact of entry timing, mode of entry, market focus, and location advantages on the financial performance and survival of multinational corporations (MNCs) in China. Three major results were found. First, MNCs that entered China in an earlier year had a higher level of profit than those that entered in a later year. Second, equity joint ventures (EJVs) had a higher profit level than cooperative operations or wholly foreign‐owned subsidiaries. Third, MNCs that utilized well the location advantages in China had a higher profit. We also found that EJVs were more likely to survive compared to cooperative operations, while wholly owned subsidiaries did not differ from EJVs. The findings are based on a 2‐year study of about 1000 MNC operations in China. Copyright © 1999 John Wiley & Sons, Ltd.     

How marketing capabilities and current performance drive strategic intentions in international markets

Drawing from two strategic views of the firm—the capability-based view and performance-feedback theory—this study examines the role of both marketing capabilities and current market performance as potential influencers of two key aspects of the intended future competitive strategy of firms operating in international markets: efficiency and marketing differentiation. Hypotheses are developed and tested in a survey of a sample of British exporting manufacturers. The findings are supportive of a more prominent role of marketing capabilities over recent market performance on future strategic intentions in export markets. Additional analyses of firms with an already established market position reveal a clear effect of informational capability on marketing differentiation and of product development capability and current market performance on efficiency intentions. We also find that target international market competitive intensity is a direct driver of efficiency-related but not differentiation-related strategic intentions.     

Product diversification in international joint ventures: performance implications in an emerging market

This study extends product diversification research to a new organizational form (IJV) and a new environmental context (emerging market). It explores the extent to which product relatedness with both foreign and local parents affects IJV performance as perceived by venture managers. After controlling for relevant variables, analysis of the data containing 134 IJVs in China validates our major premise: the relatedness of an IJV's products with that of its foreign and local parents is positively associated with its performance. An IJV maintaining bilateral related diversification (i.e., with both parents) performs better than a venture maintaining a unilateral related linkage (i.e., with one parent), which in turn outperforms an IJV which is unrelated to either parent. When resource complementarity or goal congruity between parents is higher, there is a stronger positive relationship between product relatedness and IJV performance. When structural opportunities are fewer or institutional deterrence is higher, there is a weaker positive relationship between product relatedness and IJV performance. Copyright © 2002 John Wiley & Sons, Ltd.     

When experience meets national institutional environmental change: foreign entry attempts of U.S. firms in the Central and Eastern European region

We develop an institutional change perspective to examine the tension that can exist between evolving external environmental influences and internal organizational influences on foreign entry attempts. Using data on the entries of 215 U.S. public firms made into 11 Central and Eastern European transition economies during the period of 1990–2003, we find that shifts in national institutional environments, from a socialist to a market economy, reduce the extent of challenges encountered to make a hierarchical entry, which leads to an increase in foreign hierarchical entry attempts but not necessarily to a decrease in relational entry attempts as institutional transformation. We find evidence of inertial influences as experienced entrants tend to follow their previous decisions when making subsequent entry attempts. Further, they are less responsive in their foreign entry strategies to the institutional transformation in a given host country than inexperienced firms. We also find that the experience gained from relational entries results in more hierarchical entry attempts, but hierarchical entry experience results in fewer relational entry attempts. Copyright © 2009 John Wiley & Sons, Ltd.     

Mimetic entry and bandwagon effect: the rise and decline of international equity joint venture in China

The rise and decline of foreign entry strategies in transition economies is an important yet largely overlooked issue in the literature. This study is a step toward filling this gap by examining how mimetic entry within reference groups and the emergence of a competing strategy affect the bandwagon phenomenon of a dominant strategy in the context of China, where international equity joint ventures (EJVs) used to be a dominant entry strategy among foreign firms in the 1990s. Findings from a sample of 1,123 EJVs formed in China's non-restricted industries from 1990 to 2003 show that the impact of home and host-country industry effects are not symmetric between the EJV rise and decline periods. Cross-border merger and acquisition (M&A) as a competing strategy has an important impact during the EJV decline period but not the rise period. The interactive effects between EJV and M&A strategies occur only in the host-country industries. We discuss such results and offer suggestions for future research. Copyright © 2007 John Wiley & Sons, Ltd.     

Effect of equity ownership on the survival of international joint ventures

This note extends transaction cost analysis of international joint ventures (IJVs) to include explicitly the effect of equity. It challenges the common practice of treating all foreign investments with between 5 percent and 95 percent equity as IJVs. A fine‐grained analysis of the role of foreign equity ownership on the survival of 12,984 overseas subsidiaries confirms a declining, nonlinear, and asymmetrical relationship between equity and mortality in overseas subsidiaries. While investments involving small ownership levels (<20%) have very high mortality rates, those with high ownership levels (>80%) have mortality rates comparable to that of wholly owned subsidiaries. Implications for research, practice, and policy are discussed. Copyright © 2003 John Wiley & Sons, Ltd.     

Host country executives' assessments of international joint ventures and divestitures: An experimental approach

A large body of research examines the modes by which multinational firms enter foreign markets, yet little work has considered how host country executives evaluate alternative modes of accepting inward foreign direct investment (FDI). This study adopts the host country firm's perspective to investigate the factors that affect Chinese executives' assessments of international joint ventures (IJVs) and divestitures as different modes for engaging inward FDI opportunities. We use an experimental approach to test our argument that executives' preferences for IJVs versus divestitures are driven by multinational firms' resources as well as potential transaction hazards and available remedial mechanisms. This study complements extant research on firms' entry mode choice by offering a direct test of comparative economic organization by explicitly comparing the attractiveness of alternative modes. Copyright © 2013 John Wiley & Sons, Ltd.     

The relationship between product and international diversification: The role of experience

We establish prior diversification experience as a key determinant of the relationship between growth of product and international diversification. Prior diversification experience allows firms to overcome short‐run constraints on simultaneous diversification growth imposed by the difficulty to transfer tacit knowledge, ambiguous competencies, and limited absorptive capacity. Studying U.S. and European firms, we find a positive relationship between growth in product and international scope for firms with high and a negative one for those with little prior diversification experience. Further, we find that product diversification experience has greater impact than international diversification experience. Copyright © 2014 John Wiley & Sons, Ltd.     

The choice of entry mode in sequential foreign direct investment

Relatively few studies have examined the importance of an entry's sequential position to the choice of foreign entry mode. We use a dynamic model to analyze sequential entries into the United States from 1975 to 1992. Our findings show that several independent variables which explain a firm's initial mode of entry do not explain the modes of subsequent entries. These findings underscore the importance of experience in foreign investment, as companies learn from early entries and adapt the modes of subsequent ones. Copyright © 2001 John Wiley & Sons, Ltd.     

Do low-quality products affect high-quality entry? Multiproduct firms and nonstop entry in airline markets

This paper studies the effect of product ownership and quality on nonstop entry in the airline industry. Specifically, this paper empirically examines the decision of an airline to offer high-quality nonstop service between cities given that the airline may or may not be offering lower quality one-stop service. I find that airlines that offer one-stop service through a hub are less likely to enter that same market with nonstop service than those that do not. In addition, the quality of the one-stop service is an important determinant of entry. Airlines are more likely to enter a market with nonstop service if their own or their rival's one-stop service in the market is of lower quality. Estimates suggest that the entry of a rival nonstop carrier diminishes the probability a carrier enters the market with nonstop service. However, airlines offering one-stop service respond differently to nonstop rivals. In particular, relative to other carriers, those offering one-stop service are more likely to enter markets if there are nonstop rivals, suggesting that cannibalization effects are diminished in the presence of nonstop competition.     

Mode of entry and ex-post performance

In this study I develop and empirically test hypotheses delineating how a set of industry- and firm-level factors are differentially associated with postentry performance of de novo and acquisitive entrants. First, I conceptualize structural entry barriers as sunk costs or irrecoverable investments that entrants must make in the entered industry to be competitive vis-à-vis incumbents. I then argue that de novo and acquisitive entrants differ in three important ways: (1) incremental vs. up-front sunk cost investments in overcoming impediments to entry; (2) increasing productive capacity vs. changing ownership in the entered industry; and (3) low vs. high costs of integration when realizing synergies with parent firms. I use the Trinet, FTC-ALB, and Compustat data bases to construct a sample comprising de novo and acquisitive entries made during the period 1980–82. Next, I evaluate postentry survival and growth between 1982 and 1986. Overall, empirical tests provided partial support for the hypotheses, and the explained variance in my models ranged from 17 percent to 37 percent. © 1998 John Wiley & Sons, Ltd.     

Strategy fit and performance consequences of international marketing standardization

This study addresses a long‐standing debate in the literature regarding the appropriateness and performance consequences of marketing strategy standardization vs. adaptation. Much of the relevant literature represents the headquarters' viewpoint and broadly assesses antecedents of standardization or adaptation across widely varying markets. Using strategic fit as the theoretical platform for analysis, the study investigates international marketing strategy for a specific product or line within subsidiaries of U.S., Japanese, and German multinational corporations (MNCs) operating in the U.K. The results indicate that degree of strategy standardization is significantly related to similarity between markets with respect to regulatory environments, technological intensity and velocity, customs and traditions, customer characteristics, a product's stage in its life cycle, and competitive intensity. On the critical question of performance consequences, the findings suggest that superior performance results from strategy standardization only to the extent that there is fit or coalignment between the MNC's environmental context and its international marketing strategy choice. Copyright © 2006 John Wiley & Sons, Ltd.