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The direction of regulatory institutional distance and MNE’s subsidiary ownership strategy: re-examining theory and evidence in the case of emerging markets
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posted on 2023-06-09, 16:55 authored by Palitha Konara, Vikrant ShirodkarThe possibility of institutional distance exerting an asymmetric effect on the entry strategies of multinational enterprises (MNEs) has attracted recent scholarly attention. In this context, we re-examine the relationship described by Hernandez and Nieto (2015) on the effect of the direction of regulatory institutional distance on MNEs’ choice of entry mode in host countries. We extend this research by (1) focussing on the context of emerging markets and (2) accounting for a greater variety of MNEs as well as institutions by including both large and small firms, and a larger set of home and host countries. In contrast to Hernandez and Nieto’s study, we find that, in the context of emerging markets, institutionally distant MNEs are more likely to choose the full-ownership mode when they originate from an institutionally stronger country in comparison to the host (emerging) country, and they are more likely to choose the joint-ownership mode when they originate from an institutionally weaker country. We discuss our findings with respect to Hernandez and Nieto’s study, which explores this relationship more generally (i.e. beyond emerging-market contexts), however in the context of small and medium enterprises.
History
Publication status
- Published
ISSN
1745-8862Publisher
Emerald Publishing LimitedExternal DOI
Volume
12Page range
135-154Pages
548.0Book title
Distance in international business: concept, cost and valuePlace of publication
Bingley, UKISBN
9781787437197Series
Progress in International Business ResearchDepartment affiliated with
- Business and Management Publications
Research groups affiliated with
- International Business Publications
Full text available
- No
Peer reviewed?
- Yes
Editors
Rob van Tulder, Alain Verbeke, Jonas PuckLegacy Posted Date
2019-02-19Usage metrics
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