Investment Mode Research Articles

The Impact of Market-Related Factors on the Entry Mode of Small and Medium Enterprises

Understanding a firm's internationalization processes, including entry mode decisions, has attracted increasing attention from the literature in international business. This article researches the impact of market determinants on the entry modes choice of exporting small and medium enterprises (SMEs), specifically on the variables associated with the home market, the host market, and the proximity between them. Following a quantitative methodological approach, an Internet survey was applied to AIMinho's associates, a regional industry association in Northern Portugal. Principal components analyses and Mann-Whitney tests were performed to analyze data. The study's results reveal a patent preference of SMEs for export entry modes in detriment of both contractual and investment modes. Moreover, results reveal the lack of influence of market-related variables on the choice between exports or contractual entry modes. This research contributes to the current knowledge on SMEs internationalization by aggregating in one single study all market-related variables identified in the literature.

Language distance and international acquisitions

This paper analyzes the role language distance plays on the choice between greenfield investments and acquisitions when investing abroad. Based on transaction cost theory, the paper focuses on the impact of language distance on ex ante and ex post costs in international acquisition processes. In order to empirically test our predictions, a database of foreign direct investments made by listed Spanish firms was used. Empirical results point towards a tendency to avoid acquisitions as investment mode in international contexts characterized by high language distance.

Transactions: A New Look at Services Sector Foreign Direct Investment in Asia

This paper presents new micro-level data consisting of individual greenfield investment projects and mergers and acquisitions as a source for detailed analysis of services sector cross-border investment flows among the Asian Development Bank (ADB) regional membership in Asia. The new transactional foreign direct investment (FDI) data are methodologically distinct from traditional BPM5-compliant FDI data but found to yield generally comparable aggregates, when compared with the latest available International Monetary Fund (IMF) data from the Comprehensive Direct Investment Survey for the ADB regional membership. The services sectors are found to receive considerably larger amounts of foreign investment, when compared with the Asian region's manufacturing and raw materials sectors. OECD countries account for roughly three-quarters of total recorded inward services sector FDI of about $2 trillion, relatively evenly split between the United States, the EU-27, and regional OECD-level-income countries. The presence of sizable regional upward flowing services sector investments into OECD-level-income economies is verified. Preliminary policy conclusions are drawn based on the new transactional FDI data results concerning prospects for regional services sector liberalization, threshold income levels for inward services sector FDI, upward-flowing regional services FDI, and preferred modes of services sector investments.

The Impact of Strategic R&D Investments on the Commercialization of Emerging Technological Regimes

The study explores how incumbents respond to emerging technological regimes and focuses on the impact of their upstream strategic R&D investments on downstream commercialization. It departs from the typical emphasis in the technology management literature on incumbents’ internal R&D investments to also consider a broad array of adaptive responses that entail external research contracting, research collaborations and acquisitions. We argue that the different modes of investments represent varying degrees of how the pursuit of the emerging technology is decoupled from the existing organizational context, and the value of this decoupling varies whether the technology regime reinforces the incumbent’s business model (sustaining) or not (disruptive). We test these arguments in the context of the global biopharmaceutical industry from 1991 to 2008, a period during which it witnessed the emergence of two revolutionary therapeutic approaches based on genetic engineering - Monoclonal Antibodies (MAbs ) and Gene Th...

Based on the Model of ISM in Risk Analysis for the BT Reclaimed Water Project

The source of capital construction projects is one of the bottlenecks of restricting the reclaimed water projects development which is one of the municipal infrastructures. Project financing can be solving the capital source of projects very well. Renewable water project investment and financing mode as the breakthrough point, analyzed the characteristics of the renewable water project, put forward the BT mode in renewable water the feasibility of application of the project, and analyzed the reclaimed water projects related to the main risk elements and its origin, used interpretative structure model (ISM) to establish risk factors charts, get the main risk factors should be controlled and the relationship between each other, offer the reference for the recycled water project decision-making and the risk management.

Hatching asynchrony and offspring sex influence the subsequent exploratory behaviour of zebra finches

The ecological and evolutionary consequences of variation in behaviour between individuals are well studied, yet the causes of such variation remain poorly understood. Parents can generally exert a great deal of influence on the early life of their offspring, so one possibility is that the mode of parental investment determines subsequent offspring behaviours. In birds, hatching asynchrony occurs when females begin incubation prior to clutch completion, and the subsequent hatching regime creates phenotypic disparities between early and late-hatched offspring. By experimentally manipulating hatching patterns in zebra finches, Taeniopygia guttata, we examined the influence of hatching asynchrony on subsequent exploratory behaviour during adulthood. Late-hatched birds from asynchronous broods explored the novel environment more than their siblings which hatched earlier or came from synchronous broods, although there were no differences in exploratory behaviour towards a novel object. Additionally, females were bolder towards a novel object than were males, independently of hatching regime, but there were no sex differences in exploration of the novel environment. Our results support the idea that both hatching asynchrony and sex have previously underappreciated influences on offspring behaviours, and highlight the importance of variation in parental investment in generating and maintaining behavioural variation.

“Decentralization and Reforms in Albania”, Require Economical and Political Active Role of All Actors

The aim of this article is to present an overview of the international environment, highlighting the differing levels, from local and national, to regional and international. The discussion focuses on the main identifying features of the business organization, including ownership and decision-making structures, as they adapt in differing geographical contexts. It is emphasized that the multinational enterprise (MNE), central to international business activities, covers a variety of organizations, large and small and the growing interactions between organizations, governmental and societal players are resulting in a broader view of the business organization in society. This argument looks at varying perspectives, often argued to be the defining characteristic of our times. The Government of Albania has adopted a comprehensive policy reform program to strengthen Albania's weak institutional and governance capacity. Naturally, at the end of this article we will have a complete vision of Albanian situation. We are going to illustrate the nature of globalization, highlighting trends in globalized production and market, by contrasting the key features of foreign direct investment, foreign indirect investment and other modes of international operations.

The Choice of Foreign-Market Investment Modes: An Empirical Analysis Using Transaction-Cost and Organizational Learning Frameworks

In this study, we explain the foreign firm’s investment mode choice between international joint-venture (IJV) andwholly owned subsidiary (WOS) by analyzing its intrinsic characteristics related to its assets contributed andexperiences on host country and the uncertainty of the local environment. Based on the logit regressions of 6603investment mode decisions made by 5802 foreign investors in Vietnam during 1988 - 2008, our findings wereconsistent with transaction-cost and organizational learning frameworks. We find positive associations betweenhighly specific assets and the stock of experience of foreign firms with their choice of WOS; so negative oneswith their choice of IJV as investment mode. Also, the IJV would be selected in a highly uncertain context; but ina favorable one, the WOS is preferred by the foreign firm.

Research on Domestic Non-Governmental Capital Investment Mode of Mining Wasteland

The ecological environmental protection and improvement need massive funds, and these funds mostly belong to the historical account and there’s little economic benefits. Under the condition of socialist market economy, the fund performance is not initiative and positive, unable to achieve the diversification of investment. At the same time, management time of the midium- and small-sized mining wasteland of mines is relatively short, The tax of environmental restoration for mining the mining enterprises have paid is insufficient to use in carrying on completely renovation the destroyed land. Therefore, this article analyzed the domestic non-governmental capital which invests the medium and small sized mining destroyed field based on systems dynamics, and to explore the feasibility of mining improvement as well as discuss private capital investment patterns in order to find the proper governance mode and methods.

Foreign direct investment options: Bertos Manufacturing Corporation

This case deals with the key considerations when planning an international expansion through direct investment in foreign markets. These considerations must be addressed by a finance company seeking to support the international sales of its parent firm, a US-based multinational enterprise (MNE). The company already operates three foreign subsidiaries - in Canada, Mexico (both NAFTA members), and the UK - but wishes to increase this network further through entry into additional markets. Ten candidate countries are being considered to determine the five most suitable for entry. A supplementary consideration is the mode of direct investment in the selected markets. Hence the need for a rational decision on where to invest and what form should this investment take.

Transactions: A New Look at Service Sector Foreign Direct Investment in Asia

This paper presents new micro-level data consisting of individual greenfield investment projects and mergers and acquisitions as a source for detailed analysis of service sector cross-border investment flows among the Asian Development Bank (ADB) regional members. The new transactional foreign direct investment (FDI) data are methodologically distinct from traditional BPM5- compliant FDI data but found to yield generally comparable aggregates, when compared with the latest available International Monetary Fund (IMF) data from the Comprehensive Direct Investment Survey for the ADB regional members. The service sectors are found to receive considerably larger amounts of foreign investment, when compared with the Asian region’s manufacturing and raw materials sectors. Organisation for Economic Co-operation and Development (OECD) countries account for roughly three-quarters of total recorded inward service sector FDI of about $2 trillion, relatively evenly split between the United States, the EU-27, and regional OECD-level-income countries. The presence of sizable regional “upward flowing” service sector investments into OECD-level- income economies is verified. Preliminary policy conclusions are drawn based on the new transactional FDI data results concerning prospects for regional service sector liberalization, threshold income levels for inward service sector FDI, upward-flowing regional services FDI, and preferred modes of service sector investments.

Joint ventures and the development of the Chinese automotive industry

Over the past decade, sales of China's automotive industry rose from 2 million units to 18 million units overtaking the USA industry's level of sales in 2009. This paper analyses the development of the automotive industry in China with a particular focus on the role of the joint venture mode of foreign direct investment. Theories of multinational enterprises and foreign direct investment are examined to provide explanations for the motives for international investment, particularly joint ventures, and the predicted effects upon the host country. In addition to the contribution of joint ventures to the automotive industry in China, the development of indigenous Chinese automotive firms is also discussed.

Impact of Institutional Environment on the Choice of Entry Mode: Evidence from Chinese Enterprises

This paper studied the influence of institutional environment on selection of entry modes for Chinese enterprises’ regarding overseas investment from three dimensions, i.e. regulation mechanism, normalization mechanism and imitation mechanism. Based on a survey of 243 Chinese enterprises with overseas investment and from the selection of establishment mode and ownership mode, this research investigated on the ways these factors influence and also analysis the degree of influence of the key external and internal institutional factors such as governance quality, cultural distance, integration of parent and subsidiary companies and international experience, etc. According to the results obtained for the Chinese enterprises, the regulation mechanism in institutional environment has significant influence on selection of entry mode of overseas investment. The sounder the policies, laws and other formal institutional factors of the host country the more Chinese enterprises tend to select the entry modes of acquisition and wholly owned subsidiary. In respect of normalization mechanism, Chinese enterprises deal with the influence of informal institutional factors including cultural distance mainly through adjustment of ownership mode; the longer the cultural distance between the host country and China the more the Chinese enterprises tend to choose the entry mode of joint venture. In respect of imitation mechanism, the higher the degree of integration of parent and subsidiary companies, the more the enterprises tend to enter the local market through greenfield investment. Different from the situation of transnational enterprises from many developed countries, international experience has no significant influence on Chinese enterprises’ selection of entry mode of overseas investment.

What changes the rules of the game in wholly owned subsidiaries? Determinants of knowledge acquisition from parent firms

We examine key factors affecting the extent of knowledge acquisition from multinational enterprises (MNEs) in their wholly owned subsidiaries (WOSs). As the volume of foreign direct investment (FDI) by MNEs is rapidly growing, empirical studies dealing with knowledge acquisition from parent firms in subsidiaries are in the limelight. However, as far as we know, none has attempted to identify primary mechanisms influencing subsidiary learning by dividing WOSs based on ‘investment mode’ and ‘investment direction’. We believe WOSs are characterized by these two issues and thus this research contributes to current literature by providing a detailed picture of learning mechanisms in subsidiaries. We advance a series of propositions to achieve the research objective by using a sample of WOSs established by MNEs in Korea. By doing this, we reveal that subsidiary learning depends significantly on absorptive capacity in learning organizations, relational capital and parent firms’ behavior. Also, we confirm that factors facilitating knowledge acquisition are influenced by investment mode and investment direction. Based on the results, this study provides some useful implications for MNEs and policy makers in local markets.

Equity-based entry modes of the Greater Chinese Economic Area's foreign direct investments in Vietnam

In January 2007, Vietnam became the 150th member of the World Trade Organization (WTO). Vietnam is located in the heart of Asia and has a resource-rich economy, which offers it a significant advantage in attracting foreign direct investments (FDIs). The research focuses on equity-based entry mode choices adopted by multinational corporations (MNCs) in the Greater Chinese Economic Area (GCEA) for entering Vietnam. The statistical results indicate that equity-based entry modes are significant when FDI firms entering Vietnam originate from the GCEA, which includes Mainland China, Hong Kong, Taiwan, and Singapore. However, the interaction results show that industry does not have a moderating effect on the relationship between location and entry mode, whereas it is not found that industrial cluster is specific to any one location. The generalized model has implications for the theoretical and managerial perspectives of both the host and the home countries.

Productivity and the Internationalization of Firms – Cross-Border Acquisitions Versus Greenfield Investments

This paper extends the literature on the determinants of international activity at the firm level towards cross-border acquisitions and greenfield investments as different modes of FDI using a rich dataset of British firms. While multinational firms are characterized by higher productivity levels than exporters on average, the productivity ranking predicted by Helpman et al. (2004) does not hold within all types of industries and across all modes of foreign direct investment. In line with Nocke & Yeaple (2007) it matters whether MNEs engage abroad via greenfield investments or cross-border acquisitions. Acquirers in crossborder deals are the most productive firms in sectors with a high share of intangible assets, but the least productive group of all internationally active firms in other industries.

The Charisma of Power and the Military Sublime in Tiananmen Square

While a growing scholarship has shed light on the spatial transformations of Tiananmen Square and its environs, not enough attention has been paid to the sacralization of power through symbols, rituals, and mythologies that lend enduring legitimacy to the Chinese Communist Party and the socialist revolution it led. This article examines how the official iconography of Tiananmen Square constructs the charisma of power through what I call the “military sublime.” Using the 1985 filmThe Big Paradeas a primary example, I argue that the martyrology and pageantry of the People's Liberation Army (PLA) exemplify the dominant mode of symbolic investment of space which not only constitutes the nation as a militarized body politic but also frames the tradition of dissent associated with the Square, most notably the 1989 protest movement.

Mixed oligopoly, optimal privatization, and foreign penetration

This paper examines the impact of foreign penetration on privatization in a mixed oligopolistic market. In contrast to the simple framework of single domestic market with foreign entry by entry mode of foreign direct investment (FDI) or exports, our result shows that government should increase the degree of privatization along with increasing proportion of domestic ownership of multinational firms. Furthermore, we show that an increase in domestic ownership of multinational firms raises all domestic private firms' profit and social welfare, while it may either increase or decrease public firm's profit. With the aid of numerical example, intensive competition from private firms in general will enhance the degree of privatization gradually; in particular, the degree of privatization is lower in the presence of multinational firms.

Inconsistent preferences in environmental protection investment and the central government's optimal policy

Environmental protection plans cannot succeed without full cooperation among related units. However, inconsistent investment preferences toward environmental protection increase the damage to the environment. This article employs the contract mechanism to analyse environmental protection effects when the central government directly subsidizes the local governments. The results reveal that subsidies from the central government are not only unable to solve the problem of the inconsistent investment preferences among the central and local governments but also induce the free-riding behaviour of local governments. Because of the free-riding behaviour of the local governments, there is no such equilibrium in which the central government prefers the sequential investment mode while the local governments prefer the simultaneous investment mode.

The Differential Impact of Religion on Life History and Reproductive Strategy: Muslim and Orthodox Gypsies in Serbia

Previous studies have found that Gypsy populations in Europe exhibit more of a low investment mode of reproduction than surrounding non-Gypsy populations. In Serbia, however, Orthodox Christian Gypsies differ from Muslim Gypsies in a variety of cultural and reproductive behaviors. Data gathered during fieldwork undertaken in three Gypsy settlements in Serbia are used to evaluate the hypothesis that religious affiliation predicts variation in reproductive strategies within Gypsy populations. This hypothesis is supported by data indicating that Orthodox Christian Gypsies give more parental care to each of their fewer children than do the Muslim Gypsies, regardless of their location, type of settlement, and socioeconomic status. Differences in the two religious traditions might be responsible for this pattern.