Abstract
This paper provides insights into the choice of governance mode among relatively similar multinational companies (MNCs) entering into an emerging industry characterised by high uncertainty related ...
Highlights
Emerging industries are new industries in the early stages of development (Low & Abrahamson, 1997); since emerging industries can propose new ways to grow and sustain competitiveness, they are attractive for existing firms that have been established in other industries
The findings suggest that firms’ choice of governance mode when entering an emerging industry is affected by their different assessments of uncertainties related to technology, market and partners, the choice of competitors and preferences based on earlier experience
Earlier studies suggest that flexible governance modes such as minority equity investments and corporate venture capital (CVC) are more beneficial than acquisitions when entering emerging industries that are characterised by high uncertainty in terms of markets and technology
Summary
New emerging industries may have a large economic impact on the success of firms and regions, and it is important to understand how emerging industries develop and the role of relevant stakeholders such as large and resourceful firms. This paper discusses how the high uncertainty related to emerging industries affects the entry and governance modes of large firms It focuses on five large global firms and their entry into the emerging tidal energy industry. The findings suggest that firms’ choice of governance mode when entering an emerging industry is affected by their different assessments of uncertainties related to technology, market and partners, the choice of competitors and preferences based on earlier experience. These insights can be useful for managers evaluating new business opportunities, and for policy-makers working to develop new emerging industries such as the tidal energy industry
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