IDEAS home Printed from https://ideas.repec.org/a/eee/worbus/v52y2017i3p372-385.html
   My bibliography  Save this article

Firm age, marketization, and entry mode choices of emerging economy firms: Evidence from listed firms in China

Author

Listed:
  • Xie, Qunyong

Abstract

Prior entry mode studies have not paid close attention to the impact of firm age. This study applies an organizational ecological perspective to address the impact of firm age on international entry mode choices. This study also utilizes the institution-based view to theorize on the interaction effect of firm age and the degree of marketization in a firm’s local economy. Using listed firms from China as the study sample, an inverted U-shaped relationship between firm age and the choice of high-equity modes was found, and a higher degree of marketization further reinforced this relationship. Hence, this study contributes to entry mode research by building new theoretical mechanisms and by providing new empirical results, while incorporating marketization.

Suggested Citation

  • Xie, Qunyong, 2017. "Firm age, marketization, and entry mode choices of emerging economy firms: Evidence from listed firms in China," Journal of World Business, Elsevier, vol. 52(3), pages 372-385.
    • Handle: RePEc:eee:worbus:v:52:y:2017:i:3:p:372-385
    DOI: 10.1016/j.jwb.2017.01.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1090951617300263
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jwb.2017.01.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gerald Yong Gao & Janet Y Murray & Masaaki Kotabe & Jiangyong Lu, 2010. "A “strategy tripod” perspective on export behaviors: Evidence from domestic and foreign firms based in an emerging economy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(6), pages 1090-1091, August.
    2. David Ahlstrom & Garry D. Bruton & Li Zhao, 2013. "Turning good research into good publications," Nankai Business Review International, Emerald Group Publishing Limited, vol. 4(2), pages 92-106, May.
    3. Chari, Murali D.R. & Banalieva, Elitsa R., 2015. "How do pro-market reforms impact firm profitability? The case of India under reform," Journal of World Business, Elsevier, vol. 50(2), pages 357-367.
    4. Ahlstrom, David & Bruton, Garry D. & Yeh, Kuang S., 2008. "Private firms in China: Building legitimacy in an emerging economy," Journal of World Business, Elsevier, vol. 43(4), pages 385-399, October.
    5. Joel A. C. Baum & Paul Ingram, 1998. "Survival-Enhancing Learning in the Manhattan Hotel Industry, 1898--1980," Management Science, INFORMS, vol. 44(7), pages 996-1016, July.
    6. Vinit M. Desai, 2008. "Constrained Growth: How Experience, Legitimacy, and Age Influence Risk Taking in Organizations," Organization Science, INFORMS, vol. 19(4), pages 594-608, August.
    7. Douglass C. North, 2005. "Introduction to Understanding the Process of Economic Change," Introductory Chapters, in: Understanding the Process of Economic Change, Princeton University Press.
    8. Harald Oberhofer & Michael Pfaffermayr, 2012. "Fractional Response Models - A Replication Exercise of Papke and Wooldridge (1996)," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 6(3), September.
    9. Stewart Thornhill & Raphael Amit, 2003. "Learning About Failure: Bankruptcy, Firm Age, and the Resource-Based View," Organization Science, INFORMS, vol. 14(5), pages 497-509, October.
    10. Prasad Padmanabhan & Kang Rae Cho, 1999. "Decision Specific Experience in Foreign Ownership and Establishment Strategies: Evidence from Japanese Firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(1), pages 25-41, March.
    11. Gatignon, Hubert & Anderson, Erin, 1988. "The Multinational Corporation's Degree of Control over Foreign Subsidiaries: An Empirical Test of a Transaction Cost Explanation," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(2), pages 305-336, Fall.
    12. Peter J Buckley & L Jeremy Clegg & Adam R Cross & Xin Liu & Hinrich Voss & Ping Zheng, 2007. "The determinants of Chinese outward foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(4), pages 499-518, July.
    13. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 411-432, September.
    14. Daniel Kaufmann & Aart Kraay & Massimo Mastruzzi, 2004. "Governance Matters III: Governance Indicators for 1996, 1998, 2000, and 2002," The World Bank Economic Review, World Bank, vol. 18(2), pages 253-287.
    15. David Ahlstrom & Michael N. Young & Eunice S. Chan & Garry D. Bruton, 2004. "Facing Constraints to Growth? Overseas Chinese Entrepreneurs and Traditional Business Practices in East Asia," Asia Pacific Journal of Management, Springer, vol. 21(3), pages 263-285, September.
    16. Peter J. Buckley & Adam R. Cross & Hui Tan & Liu Xin & Hinrich Voss, 2008. "Historic and Emergent Trends in Chinese Outward Direct Investment," Management International Review, Springer, vol. 48(6), pages 715-748, December.
    17. McCloskey, Deirdre N., 2013. "Tunzelmann, Schumpeter, and the Hockey Stick," Research Policy, Elsevier, vol. 42(10), pages 1706-1715.
    18. Slangen, Arjen H.L. & van Tulder, Rob J.M., 2009. "Cultural distance, political risk, or governance quality? Towards a more accurate conceptualization and measurement of external uncertainty in foreign entry mode research," International Business Review, Elsevier, vol. 18(3), pages 276-291, June.
    19. Michael Young & Terence Tsai & Xinran Wang & Shubo Liu & David Ahlstrom, 2014. "Strategy in emerging economies and the theory of the firm," Asia Pacific Journal of Management, Springer, vol. 31(2), pages 331-354, June.
    20. Klaus E Meyer & Yuan Ding & Jing Li & Hua Zhang, 2014. "Overcoming distrust: How state-owned enterprises adapt their foreign entries to institutional pressures abroad," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 45(8), pages 1005-1028, October.
    21. Yan Zhang & Nandini Rajagopalan, 2010. "Once an outsider, always an outsider? CEO origin, strategic change, and firm performance," Strategic Management Journal, Wiley Blackwell, vol. 31(3), pages 334-346, March.
    22. Chengqi Wang & Junjie Hong & Mario Kafouros & Mike Wright, 2012. "Exploring the role of government involvement in outward FDI from emerging economies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 43(7), pages 655-676, September.
    23. Hu, Helen Wei & Cui, Lin, 2014. "Outward foreign direct investment of publicly listed firms from China: A corporate governance perspective," International Business Review, Elsevier, vol. 23(4), pages 750-760.
    24. Bruton, Garry D. & Ahlstrom, David & Wan, Johnny C. C., 2001. "Turnaround success of large and midsize Chinese owned firms: evidence from Hong Kong and Thailand," Journal of World Business, Elsevier, vol. 36(2), pages 146-165, July.
    25. Ahlstrom, David & Levitas, Edward & Hitt, Michael A. & Dacin, M. Tina & Zhu, Hong, 2014. "The three faces of China: Strategic alliance partner selection in three ethnic Chinese economies," Journal of World Business, Elsevier, vol. 49(4), pages 572-585.
    26. Gerald Yong Gao & Janet Y Murray & Masaaki Kotabe & Jiangyong Lu, 2010. "A “strategy tripod” perspective on export behaviors: Evidence from domestic and foreign firms based in an emerging economy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(3), pages 377-396, April.
    27. Ahlstrom, David & Bruton, Garry D. & Lui, Steven S. Y., 2000. "Navigating China's changing economy: Strategies for private firms," Business Horizons, Elsevier, vol. 43(1), pages 5-15.
    28. Keith D. Brouthers & Maarten Gelderman & Patrick Arens, 2007. "The Influence of Ownership on Performance: Stakeholder and Strategic Contingency Perspectives," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 59(3), pages 225-242, July.
    29. Daniel A. Levinthal & James G. March, 1993. "The myopia of learning," Strategic Management Journal, Wiley Blackwell, vol. 14(S2), pages 95-112, December.
    30. Michael A. Hitt & David Ahlstrom & M. Tina Dacin & Edward Levitas & Lilia Svobodina, 2004. "The Institutional Effects on Strategic Alliance Partner Selection in Transition Economies: China vs. Russia," Organization Science, INFORMS, vol. 15(2), pages 173-185, April.
    31. Anne S. Tsui, 2004. "Contributing to Global Management Knowledge: A Case for High Quality Indigenous Research," Asia Pacific Journal of Management, Springer, vol. 21(4), pages 491-513, December.
    32. Martina Musteen & Deepak K Datta & Pol Herrmann, 2009. "Ownership structure and CEO compensation: Implications for the choice of foreign market entry modes," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(2), pages 321-338, February.
    33. Li, Peng-Yu & Meyer, Klaus E., 2009. "Contextualizing experience effects in international business: A study of ownership strategies," Journal of World Business, Elsevier, vol. 44(4), pages 370-382, October.
    34. Joseph LiPuma & Scott Newbert & Jonathan Doh, 2013. "The effect of institutional quality on firm export performance in emerging economies: a contingency model of firm age and size," Small Business Economics, Springer, vol. 40(4), pages 817-841, May.
    35. Keith D. Brouthers & Lance Eliot Brouthers, 2003. "Why Service and Manufacturing Entry Mode Choices Differ: The Influence of Transaction Cost Factors, Risk and Trust," Journal of Management Studies, Wiley Blackwell, vol. 40(5), pages 1179-1204, July.
    36. Joseph Lipuma & Scott L. Newbert & Jonathan P. Doh, 2013. "The effect of institutional quality on firm export performance in emerging economies : a contingency model of firm age and size," Post-Print hal-02312662, HAL.
    37. Yunshi Liu & Linda Wang & Li Zhao & David Ahlstrom, 2013. "Board turnover in Taiwan’s public firms: An empirical study," Asia Pacific Journal of Management, Springer, vol. 30(4), pages 1059-1086, December.
    38. Weilei (Stone) Shi & Sunny Li Sun & Mike W. Peng, 2012. "Sub-National Institutional Contingencies, Network Positions, and IJV Partner Selection," Journal of Management Studies, Wiley Blackwell, vol. 49(7), pages 1221-1245, November.
    39. Cui, Lin & Jiang, Fuming, 2009. "FDI entry mode choice of Chinese firms: A strategic behavior perspective," Journal of World Business, Elsevier, vol. 44(4), pages 434-444, October.
    40. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-632, Nov.-Dec..
    41. Klaus E. Meyer & Saul Estrin & Sumon Kumar Bhaumik & Mike W. Peng, 2009. "Institutions, resources, and entry strategies in emerging economies," Strategic Management Journal, Wiley Blackwell, vol. 30(1), pages 61-80, January.
    42. Liu, Xiaohui & Lu, Jiangyong & Chizema, Amon, 2014. "Top executive compensation, regional institutions and Chinese OFDI," Journal of World Business, Elsevier, vol. 49(1), pages 143-155.
    43. Ouimet, Paige & Zarutskie, Rebecca, 2014. "Who works for startups? The relation between firm age, employee age, and growth," Journal of Financial Economics, Elsevier, vol. 112(3), pages 386-407.
    44. Mary E. Zellmer-Bruhn, 2003. "Interruptive Events and Team Knowledge Acquisition," Management Science, INFORMS, vol. 49(4), pages 514-528, April.
    45. Mike W. Peng & Garry D. Bruton & Ciprian V. Stan & Yuanyuan Huang, 2016. "Theories of the (state-owned) firm," Asia Pacific Journal of Management, Springer, vol. 33(2), pages 293-317, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liu, Xiaohui & Gao, Lan & Lu, Jiangyong & Lioliou, Eleni, 2016. "Environmental risks, localization and the overseas subsidiary performance of MNEs from an emerging economy," Journal of World Business, Elsevier, vol. 51(3), pages 356-368.
    2. Sun, Sunny Li & Peng, Mike W. & Lee, Ruby P. & Tan, Weiqiang, 2015. "Institutional open access at home and outward internationalization," Journal of World Business, Elsevier, vol. 50(1), pages 234-246.
    3. Hitt, Michael A. & Li, Dan & Xu, Kai, 2016. "International strategy: From local to global and beyond," Journal of World Business, Elsevier, vol. 51(1), pages 58-73.
    4. Mike W. Peng & Sergey Lebedev & Cristina O. Vlas & Joyce C. Wang & Jason S. Shay, 2018. "The growth of the firm in (and out of) emerging economies," Asia Pacific Journal of Management, Springer, vol. 35(4), pages 829-857, December.
    5. Weilei (Stone) Shi & Sunny Li Sun & Daying Yan & Zhu Zhu, 2017. "Institutional fragility and outward foreign direct investment from China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(4), pages 452-476, May.
    6. Yunshi Liu & Yi-Jung Chen & Linda C. Wang, 2017. "Family business, innovation and organizational slack in Taiwan," Asia Pacific Journal of Management, Springer, vol. 34(1), pages 193-213, March.
    7. Michael Young & Terence Tsai & Xinran Wang & Shubo Liu & David Ahlstrom, 2014. "Strategy in emerging economies and the theory of the firm," Asia Pacific Journal of Management, Springer, vol. 31(2), pages 331-354, June.
    8. Hernández, Virginia & Nieto, María Jesús, 2015. "The effect of the magnitude and direction of institutional distance on the choice of international entry modes," Journal of World Business, Elsevier, vol. 50(1), pages 122-132.
    9. Lin Cui & Yi Li & Klaus E. Meyer & Zijie Li, 2015. "Leadership Experience Meets Ownership Structure: Returnee Managers and Internationalization of Emerging Economy Firms," Management International Review, Springer, vol. 55(3), pages 355-387, June.
    10. Ma, Xufei & Ding, Zhujun & Yuan, Lin, 2016. "Subnational institutions, political capital, and the internationalization of entrepreneurial firms in emerging economies," Journal of World Business, Elsevier, vol. 51(5), pages 843-854.
    11. Zhang, Hongjuan & Young, Michael N. & Tan, Justin & Sun, Weizheng, 2018. "How Chinese companies deal with a legitimacy imbalance when acquiring firms from developed economies," Journal of World Business, Elsevier, vol. 53(5), pages 752-767.
    12. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    13. Chenxi Wan & Carlos M. P. Sousa & Jorge Lengler & Qun Tan, 2023. "Entry Mode Choice: A Meta-Analysis of Antecedents and Outcomes," Management International Review, Springer, vol. 63(2), pages 193-246, April.
    14. Wen-Ting Lin & Linda C. Wang, 2021. "Family firms, R&D, and internationalization: the stewardship and socio-emotional wealth perspectives," Asia Pacific Journal of Management, Springer, vol. 38(1), pages 91-119, March.
    15. Mike W. Peng & Joyce C. Wang & Nishant Kathuria & Jia Shen & Miranda J. Welbourne Eleazar, 2023. "Toward an institution-based paradigm," Asia Pacific Journal of Management, Springer, vol. 40(2), pages 353-382, June.
    16. Ilan Alon & John Anderson & Ziaul Haque Munim & Alice Ho, 2018. "A review of the internationalization of Chinese enterprises," Asia Pacific Journal of Management, Springer, vol. 35(3), pages 573-605, September.
    17. Huang, Yuanyuan & Xie, En & Li, Yu & Reddy, K.S., 2017. "Does state ownership facilitate outward FDI of Chinese SOEs? Institutional development, market competition, and the logic of interdependence between governments and SOEs," International Business Review, Elsevier, vol. 26(1), pages 176-188.
    18. Hongping Du & Liliana Mitkova & Na Wang, 2020. "The Paths of Internationalization of Chinese Innovative Firms," Sustainability, MDPI, vol. 12(6), pages 1-27, March.
    19. Qi, Guoyou & Zou, Hailiang & Xie, Xuemei & Meng, Xiaohua & Fan, Tijun & Cao, Yuanhe, 2020. "Obedience or escape: Examining the contingency influences of corruption on firm exports," Journal of Business Research, Elsevier, vol. 106(C), pages 261-272.
    20. Ziyi Wei & Quyen T. K. Nguyen, 2020. "Local responsiveness strategy of foreign subsidiaries of Chinese multinationals: The impacts of relational-assets, market-seeking FDI, and host country institutional environments," Asia Pacific Journal of Management, Springer, vol. 37(3), pages 661-692, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:worbus:v:52:y:2017:i:3:p:372-385. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/620401/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.