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.
This article investigates stock market responses to different constellations of firm-level corporate governance mechanisms by focusing on foreign initial public offerings (IPOs) in the United States. ...We build on sociology-grounded research on financial market behavior and use a "nested" legitimacy framework to explore US investor perceptions of foreign IPO value. Using a fuzzy set theoretic methodology, we demonstrate how different combinations of monitoring and incentive-based corporate governance mechanisms lead to the same level of investor valuation of firms. Moreover, institutional factors related to the strength of minority shareholder protection in a foreign IPO's home country represent a boundary condition that affects the number of governance mechanisms required to achieve high value perceptions among US investors. Our findings contribute to the sociological perspective on comparative corporate governance and the dependencies between organizations and institutions.
This paper argues for a greater focus on an agency theory (AT) perspective in understanding corporate governance in multinational enterprises (MNEs) since, despite recent developments, the ...traditional internalization theory approach limits our understanding of the behaviour of these firms. We analyse the contribution of an AT perspective to understanding various aspects of corporate governance in MNEs: internationalization, international joint ventures (IJVs), headquarters–subsidiary relationships, and new forms of global business groups. From this analysis, we suggest that even with the emerging AT literature's focus on the role of ownership as a key governance factor, there is substantial need for research on several key corporate governance mechanisms; namely, the role and nature of dominant owners, the composition of boards of directors, the separation of CEOs and board chairs, executive remuneration, and the role of the market for corporate control. There is scope to examine further the implications of different institutional environments for AT perspectives on the behaviour of MNEs.
We introduce the topic of this Special Issue on the “Role of Financial and Legal Institutions in International Governance”, with a particular emphasis on a notion of “international mobility of ...corporate governance”. Our discussion places the Special Issue at the intersection of law, finance, and international business, with a focus on the contexts of foreign investors and directors. Country-level legal and regulatory institutions facilitate foreign ownership, foreign directors, raising external financial capital, and international M&A activity. The interplay between the impact of foreign ownership and foreign directors on firm governance and performance depends on international differences in formal/regulatory institutions. In addition to legal conditions, informal institutions such as political connections also shape the economic value of foreign ownership and foreign directors. We highlight key papers in the literature, provide an overview of the new papers in this Special Issue, and offer suggestions for future research.
Organizational theory recognizes reputation as a central element to understanding the firm. Examining investor valuations of 1,676 initial public offerings (IPOs) in the United States from 1990 to ...2011, we find that reputation transfer through an association of an IPO firm with a venture capital (VC) firm represents a resource whose value can increase/decrease over time depending on investors’ valuations of prior IPOs funded by a VC firm. We conclude that the impact of reputation transfer through association is not unidirectional but, instead, is to be viewed in the context of prior reputational development of organizations the focal firm is associated with. Furthermore, we find that three “transfer enhancers” can improve the impact of VC firm reputation transfer on IPO valuations, including the VC firm’s past experience intensity, the diversity of IPO experiences, and the number of prior syndicated IPOs involving the VC firm as a lead investor.
This paper revisits and extends our earlier work (in 2005) in the pages of this journal. We argue that there is a need for more fine‐grained understanding of the country context along two dimensions: ...(1) institutional development and (2) infrastructure and factor market development. Specifically, we propose an enriched typology of emerging economies with a focus on mid‐range emerging economies, which are positioned between traditional emerging economies and newly developed economies. Then we examine new multinationals from these mid‐range emerging economies that have internationalized both regionally and globally. We outline directions for further research based on this typology in terms of (1) government influence, (2) resource orchestration, (3) market entry, and (4) corporate governance regarding the internationalization strategy of these emerging multinationals from mid‐range economies.
Combining international business research with the knowledge-based view, this paper examines factors affecting the export orientation and export performance of high-technology Small and medium ...enterprises (SMEs) in an emerging economy. Using a unique, hand-collected dataset of 711 SMEs from Zhongguancun Science Park in China, it argues that export orientation and performance depend not only on the development of capabilities through R&D and technology transfer, but also on entrepreneurial characteristics, such as the founder's international background and global networks. It is also shown that both export orientation and performance are positively associated with the presence of a "returnee" entrepreneur.
The initial public offering (IPO) is an important stage in the life cycle of privately held and entrepreneurial firms. For innovative firms eager to capitalize on their technological advances, an IPO ...represents a springboard for a rapid international expansion of sales. However, there is little research on the longer-term, post-IPO strategic evolution of newly listed companies, including their internationalization. We build on international entrepreneurship and dynamic capabilities perspectives and examine interrelationships between R&D, exporting and growth of newly listed firms in the UK, Germany, Italy and France. Using panel data for 1110 IPOs during the period 1985–2004, we found that R&D intensity is an important antecedent factor for internationalization of sales. Both R&D and export intensities have a positive effect on the sales growth of newly listed firms. However, R&D intensity is path dependent, and is determined by levels of accumulated intangible assets and debt. In terms of time dynamics, the growth of IPO firms is at its highest level just after the float, whereas export intensity increases as IPO firms mature. We conclude that managers and IPO investors need to take into account not only growth opportunities but also past innovation strategies and financial constraints on managers' strategic choices.
Purpose
Market orientation (MO) has been shown to provide a valuable resource-based advantage in domestic markets. How internationalizing firms from emerging markets can benefit from this capability ...is more complex while facing institutional distance. The purpose of this paper is to develop and test a theory to suggest that although MO capabilities can enhance export performance, the structure where they are deployed, namely the export channel a firm uses and the market in terms of institutional distance from home, can affect the benefits derived from MO.
Design/methodology/approach
With a sample of Chinese exporters and data collected via questionnaire survey, this research uses a multiple regression model to test the hypotheses.
Findings
It finds that firms with stronger MO capabilities can improve export performance by using hierarchical channels and by exporting to more institutionally distant markets where MO provides greater value.
Originality/value
This research claims to make several important contributions to the literature by providing a better understanding of how firms can successfully deploy MO capabilities when exporting.
Exporting is a critically important strategy for firms to grow, yet research in this area has tended to ignore how firms can leverage resource-based capabilities to improve export performance. ...Building on the resource-based view and institutional theory, the authors develop a novel perspective to explain how a firm can improve export performance by aligning its export channel with its level of market orientation capabilities, contingent on the institutional distance between home and export markets. Using a unique database of Chinese exporters, the authors find that exporters with strong market orientation capabilities prefer hierarchical export channels, while those with weak market orientation capabilities prefer hybrid channels. The analysis also indicates that the institutional distance between China and the export market moderates this relation. Moreover, the authors find that aligning export channel choice with firm-level market orientation capabilities and institutional distance yields better export performance.
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