The impact of institutional hazards on foreign multinational activity: A contingency perspective
AbstractPrior studies have shown that institutional hazards in the form of formal governance deficiencies and informal cultural distance are both negatively related to the amount of foreign multinational activity in countries. We argue that the strength of these negative relationships varies systematically with the type of foreign activity (horizontal or vertical) and the type of institutional hazard (governance or cultural). Because institutional hazards striking vertical affiliates generally also have negative consequences for other parts of a multinational enterprise (MNE) while those striking horizontal affiliates do not, we hypothesize that institutional hazards are more negatively related to vertical foreign activity than to horizontal foreign activity. Since cultural hazards can generally be reduced or resolved once they materialize while governance hazards cannot, we also hypothesize that the impact of governance hazards on each type of foreign activity is more negative than the impact of cultural hazards on that type of activity. A panel data analysis of sales by US foreign affiliates to affiliated and local unaffiliated customers over the period 1996–2004 lends support to these hypotheses. Our findings thus show that the impact of institutional hazards on foreign MNE activity is more complex than previously assumed.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Palgrave Macmillan in its journal Journal of International Business Studies.
Volume (Year): 41 (2010)
Issue (Month): 6 (August)
Contact details of provider:
Web page: http://www.palgrave-journals.com/
Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Malhotra, Shavin & Zhu, PengCheng, 2013. "Paying for cross-border acquisitions: The impact of prior acquirers’ decisions," Journal of World Business, Elsevier, vol. 48(2), pages 271-281.
- Pietrovito, Filomena & Pozzolo, Alberto Franco & Salvatici, Luca, 2013.
"Internationalization choices: an ordered probit analysis at industry-level,"
Economics & Statistics Discussion Papers
esdp13071, University of Molise, Dept. SEGeS.
- Filomena Pietrovito & Alberto Franco Pozzolo & Luca Salvatici, 2013. "Internationalization choices: an ordered probit analysis at industry-level," Development Working Papers 349, Centro Studi Luca d\'Agliano, University of Milano, revised 24 Apr 2013.
- Filomena Pietrovito & Alberto Franco Pozzolo & Luca Salvatici, 2013. "Internationalization choices: an ordered probit analysis at industry-level," Mo.Fi.R. Working Papers 77, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
- Julien Gooris & Carine Peeters, 2012. "Home-Host Country Distance and Governance Choices in Service Offshoring," Working Papers ECARES ECARES 2012-007, ULB -- Universite Libre de Bruxelles.
- Aggarwal, Raj & Kearney, Colm & Lucey, Brian, 2012. "Gravity and culture in foreign portfolio investment," Journal of Banking & Finance, Elsevier, vol. 36(2), pages 525-538.
- Christophe CARRINCAZEAUX (GREThA, CNRS, UMR 5113) & Marie CORIS (GREThA, CNRS, UMR 5113), 2012. "The Decision-Making Process of Relocations: What, Where, How and Why?," Cahiers du GREThA 2012-04, Groupe de Recherche en Economie Théorique et Appliquée.
- Hutzschenreuter, Thomas & Horstkotte, Julian, 2013. "Performance effects of international expansion processes: The moderating role of top management team experiences," International Business Review, Elsevier, vol. 22(1), pages 259-277.
- Sjoerd Beugelsdijk & Jean-Fran�ois Hennart & Arjen Slangen & Roger Smeets, 2010.
"Why and how FDI stocks are a biased measure of MNE affiliate activity,"
Journal of International Business Studies,
Palgrave Macmillan, vol. 41(9), pages 1444-1459, December.
- Beugelsdijk, S. & Hennart, J.M.A. & Slangen, A.H.L. & Smeets, R., 2010. "Why and how FDI stocks are a biased measure of MNE affiliate activity," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3982853, Tilburg University.
- Karhunen, Päivi & Ledyaeva, Svetlana, 2012. "Corruption Distance, Anti-corruption Laws and International Ownership Strategies in Russia," Journal of International Management, Elsevier, vol. 18(2), pages 196-208.
- Dirk Christian Dohse & Robert Hassink & Claudia Klaerding, 2012. "Emerging multinationals, international knowledge flows and economic geography: a research agenda," Kiel Working Papers 1776, Kiel Institute for the World Economy.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elizabeth Gale).
If references are entirely missing, you can add them using this form.