IDEAS home Printed from https://ideas.repec.org/a/kap/asiapa/v34y2017i1d10.1007_s10490-016-9459-y.html
   My bibliography  Save this article

Selective imitation of compatriot firms: Entry mode decisions of emerging market multinationals in cross-border acquisitions

Author

Listed:
  • Zhenzhen Xie

    (Tsinghua University)

  • Jiatao Li

    (Hong Kong University of Science & Technology)

Abstract

This research investigates imitation in cross-border acquisitions (CBAs) by emerging market multinationals (EMNCs) in terms of the equity share sought in such acquisitions. Earlier acquisitions by peer compatriots and by developed-market multinationals (DMNCs) are both models for imitation, but the former are more similar and potentially relevant. Analysis of 608 CBAs by Chinese firms between 1987 and 2008 supports the above argument. Further, it reveals that state-owned Chinese firms are less likely to imitate in general. Both state-owned and privately-owned Chinese acquirers are most likely to imitate privately-owned Chinese acquirers previously invested in the same environment. For state-owned Chinese acquirers, more frequent pursuit of a particular target share by earlier state-owned Chinese acquirers decreases rather than increases the likelihood of a later state-owned Chinese investors buying a similar share.

Suggested Citation

  • Zhenzhen Xie & Jiatao Li, 2017. "Selective imitation of compatriot firms: Entry mode decisions of emerging market multinationals in cross-border acquisitions," Asia Pacific Journal of Management, Springer, vol. 34(1), pages 47-68, March.
    • Handle: RePEc:kap:asiapa:v:34:y:2017:i:1:d:10.1007_s10490-016-9459-y
    DOI: 10.1007/s10490-016-9459-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10490-016-9459-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10490-016-9459-y?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. Randall Morck & Bernard Yeung & Minyuan Zhao, 2008. "Perspectives on China's outward foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(3), pages 337-350, April.
    2. Erin Anderson & Hubert Gatignon, 1986. "Modes of Foreign Entry: A Transaction Cost Analysis and Propositions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 17(3), pages 1-26, September.
    3. Lin Cui & Fuming Jiang, 2010. "Behind ownership decision of Chinese outward FDI: Resources and institutions," Asia Pacific Journal of Management, Springer, vol. 27(4), pages 751-774, December.
    4. Marie Oehme & Suleika Bort, 2015. "SME internationalization modes in the German biotechnology industry: The influence of imitation, network position, and international experience," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 46(6), pages 629-655, August.
    5. Bülent Aybar & Aysun Ficici, 2009. "Cross-border acquisitions and firm value: An analysis of emerging-market multinationals," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(8), pages 1317-1338, October.
    6. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    7. Chen Lin & Yue Ma & Dongwei Su, 2009. "Corporate governance and firm efficiency: evidence from China's publicly listed firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(3), pages 193-209.
    8. Jun Xia & Justin Tan & David Tan, 2008. "Mimetic entry and bandwagon effect: the rise and decline of international equity joint venture in China," Strategic Management Journal, Wiley Blackwell, vol. 29(2), pages 195-217, February.
    9. Yadong Luo & Rosalie L Tung, 2007. "International expansion of emerging market enterprises: A springboard perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(4), pages 481-498, July.
    10. Klaus Meyer & Ornjira Thaijongrak, 2013. "The dynamics of emerging economy MNEs: How the internationalization process model can guide future research," Asia Pacific Journal of Management, Springer, vol. 30(4), pages 1125-1153, December.
    11. Ross, Stephen A, 1973. "The Economic Theory of Agency: The Principal's Problem," American Economic Review, American Economic Association, vol. 63(2), pages 134-139, May.
    12. Desislava Dikova & Arjen van Witteloostuijn, 2007. "Foreign direct investment mode choice: entry and establishment modes in transition economies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(6), pages 1013-1033, November.
    13. Daniel A. Levinthal & James G. March, 1993. "The myopia of learning," Strategic Management Journal, Wiley Blackwell, vol. 14(S2), pages 95-112, December.
    14. Megginson, William Leon, 2005. "The Financial Economics of Privatization," OUP Catalogue, Oxford University Press, number 9780195150629.
    15. Rodolphe Durand & Hayagreeva Rao & Philippe Monin, 2003. "Institutional Change in Toque Ville: Nouvelle Cuisine as an Identity Movement in French Gastronomy," Post-Print hal-00480858, HAL.
    16. Greta Hsu & Michael T. Hannan, 2005. "Identities, Genres, and Organizational Forms," Organization Science, INFORMS, vol. 16(5), pages 474-490, October.
    17. Lin Cui & Fuming Jiang, 2012. "State ownership effect on firms' FDI ownership decisions under institutional pressure: a study of Chinese outward-investing firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 43(3), pages 264-284, April.
    18. 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.
    19. Christine M Chan & Shige Makino, 2007. "Legitimacy and multi-level institutional environments: implications for foreign subsidiary ownership structure," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(4), pages 621-638, July.
    20. Daphne Yiu & Shige Makino, 2002. "The Choice Between Joint Venture and Wholly Owned Subsidiary: An Institutional Perspective," Organization Science, INFORMS, vol. 13(6), pages 667-683, December.
    21. Yuan Chen & Michael Young, 2010. "Cross-border mergers and acquisitions by Chinese listed companies: A principal–principal perspective," Asia Pacific Journal of Management, Springer, vol. 27(3), pages 523-539, September.
    22. Jiatao Li & Deborah R. Yue, 2008. "Market Size, Legal Institutions, and International Diversification Strategies: Implications for the Performance of Multinational Firms," Management International Review, Springer, vol. 48(6), pages 667-688, December.
    23. Jean-François Hennart & Arjen HL Slangen, 2015. "Yes, we really do need more entry mode studies! A commentary on Shaver," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 46(1), pages 114-122, January.
    24. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(2), pages 190-207.
    25. Jiatao Li, 2008. "Asymmetric interactions between foreign and domestic banks: effects on market entry," Strategic Management Journal, Wiley Blackwell, vol. 29(8), pages 873-893, August.
    26. Siah Hwee Ang & Mirko H. Benischke & Jonathan P. Doh, 2015. "The interactions of institutions on foreign market entry mode," Strategic Management Journal, Wiley Blackwell, vol. 36(10), pages 1536-1553, October.
    27. Jane W Lu, 2002. "Intra- and Inter-organizational Imitative Behavior: Institutional Influences on Japanese Firms' Entry Mode Choice," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(1), pages 19-37, March.
    28. Hayagreeva Rao & Philippe Monin & Rodolphe Durand, 2003. "Institutional change in toque ville : Nouvelle cuisine as an identity movement in French gastronomy," Post-Print hal-02311672, HAL.
    29. Li, Jiatao & Yao, Fiona Kun, 2010. "The role of reference groups in international investment decisions by firms from emerging economies," Journal of International Management, Elsevier, vol. 16(2), pages 143-153, June.
    30. M Krishna Erramilli, 1991. "The Experience Factor in Foreign Market Entry Behavior of Service Firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 22(3), pages 479-501, September.
    31. 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.
    32. Tarun Khanna & Jan W. Rivkin, 2006. "Interorganizational Ties and Business Group Boundaries: Evidence from an Emerging Economy," Organization Science, INFORMS, vol. 17(3), pages 333-352, June.
    33. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 995-1025.
    34. Sathyajit R Gubbi & Preet S Aulakh & Sougata Ray & M B Sarkar & Raveendra Chittoor, 2010. "Do international acquisitions by emerging-economy firms create shareholder value? The case of Indian firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(3), pages 397-418, April.
    35. Rugman, Alan M. & Li, Jing, 2007. "Will China's Multinationals Succeed Globally or Regionally?," European Management Journal, Elsevier, vol. 25(5), pages 333-343, October.
    36. Murali DR Chari & Kiyoung Chang, 2009. "Determinants of the share of equity sought in cross-border acquisitions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(8), pages 1277-1297, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liuyang Ren & Xi Zhong & Liangyong Wan, 2022. "Missing Analyst Forecasts and Corporate Fraud: Evidence from China," Journal of Business Ethics, Springer, vol. 181(1), pages 171-194, November.
    2. Yameng Li & Ruosu Gao & Jingyi Wang, 2021. "Determinants of EMNEs’ Entry Mode Decision with Environmental Volatility Issues: A Review and Research Agenda," JRFM, MDPI, vol. 14(10), pages 1-22, October.
    3. Grazia D Santangelo & Klaus E Meyer, 2017. "Internationalization as an evolutionary process," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(9), pages 1114-1130, December.
    4. Exequiel Hernandez & Mauro F Guillén, 2018. "What’s theoretically novel about emerging-market multinationals?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(1), pages 24-33, January.
    5. Lipeng Gary Ge & Cuili Qian & Jiatao Li, 2019. "Mimicry, Knowledge Spillover and Expatriate Assignment Strategy in Overseas Subsidiaries," Management International Review, Springer, vol. 59(6), pages 981-1007, December.
    6. Jiang Wei & Yang Yang & Sali Li, 2021. "Mirror or no mirror? Architectural design of cross-border integration of Chinese multinational enterprises," Asia Pacific Journal of Management, Springer, vol. 38(4), pages 1399-1430, December.
    7. Wang, Yi & Larimo, Jorma, 2020. "Survival of full versus partial acquisitions: The moderating role of firm’s internationalization experience, cultural distance, and host country context characteristics," International Business Review, Elsevier, vol. 29(1).
    8. Liuyang Ren & Xi Zhong & Liangyong Wan, 2022. "Defending the shell: differential effects of delisting pressure on R&D intensity and bribery expenditure," Review of Managerial Science, Springer, vol. 16(5), pages 1437-1470, July.
    9. Buckley, Peter J & Cui, Lin & Chen, Liang & Li, Yi & Choi, Yoona, 2023. "Following their predecessors’ journey? A review of EMNE studies and avenues for interdisciplinary inquiry," Journal of World Business, Elsevier, vol. 58(2).
    10. Wang, Yong & Yao, Xiaotao & Li, Kaige, 2022. "Imitation and rapid internationalization of emerging market firms," Journal of World Business, Elsevier, vol. 57(6).
    11. Tang, Ryan W. & Buckley, Peter J., 2020. "Host country risk and foreign ownership strategy: Meta-analysis and theory on the moderating role of home country institutions," International Business Review, Elsevier, vol. 29(4).
    12. Chao Tu & Yingfang Shi, 2023. "Market-Incentive Environmental Regulation and the Quality of Corporate Innovation," Sustainability, MDPI, vol. 15(7), pages 1-17, March.
    13. Jing Zhou & Yunwen Jiang & On Kit Tam & Wei Lan & Silin Ye, 2021. "Success in completing cross‐border acquisitions by emerging market firms: What matters?," The World Economy, Wiley Blackwell, vol. 44(7), pages 2128-2163, July.
    14. Roberto Stein, 2022. "‘Smart’ copycat mutual funds: on the performance of partial imitation strategies," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-31, December.
    15. Wang, Yong & Li, Kaige & Zhu, Yunxia & Chen, Jiawen, 2023. "Imitation, performance feedback, and outward foreign direct investments by emerging market firms," International Business Review, Elsevier, vol. 32(4).
    16. Sengupta, Aditi Sarkar & Kleindienst, Ingo & Hutzschenreuter, Thomas, 2023. "Heterogenous internationalization processes of emerging economy MNEs: A review and research agenda," Journal of International Management, Elsevier, vol. 29(3).
    17. Bersant Hobdari & Peter Gammeltoft & Jing Li & Klaus Meyer, 2017. "The home country of the MNE: The case of emerging economy firms," Asia Pacific Journal of Management, Springer, vol. 34(1), pages 1-17, March.
    18. Li, Yi & Zhang, Banruo & Fan, Di & Li, Zijie, 2021. "Digital media, control of corruption, and emerging multinational enterprise’s FDI entry mode choice," Journal of Business Research, Elsevier, vol. 130(C), pages 247-259.
    19. Vittoria G. Scalera & Debmalya Mukherjee & Lucia Piscitello, 2020. "Ownership strategies in knowledge-intensive cross-border acquisitions: Comparing Chinese and Indian MNEs," Asia Pacific Journal of Management, Springer, vol. 37(1), pages 155-185, March.

    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. Alessia Amighini & Claudio Cozza & Elisa Giuliani & Roberta Rabellotti & Vittoria Scalera, 2015. "Multinational enterprises from emerging economies: what theories suggest, what evidence shows. A literature review," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(3), pages 343-370, September.
    2. Buckley, Peter J & Cui, Lin & Chen, Liang & Li, Yi & Choi, Yoona, 2023. "Following their predecessors’ journey? A review of EMNE studies and avenues for interdisciplinary inquiry," Journal of World Business, Elsevier, vol. 58(2).
    3. Dirk Holtbrügge & Sue Claire Berning, 2018. "Market Entry Strategies and Performance of Chinese Firms in Germany: The Moderating Effect of Home Government Support," Management International Review, Springer, vol. 58(1), pages 147-170, February.
    4. Sjoerd Beugelsdijk & Tatiana Kostova & Vincent E. Kunst & Ettore Spadafora & Marc van Essen, 2018. "Cultural Distance and Firm Internationalization," Post-Print hal-02312065, HAL.
    5. Lin Cui & Fuming Jiang, 2010. "Behind ownership decision of Chinese outward FDI: Resources and institutions," Asia Pacific Journal of Management, Springer, vol. 27(4), pages 751-774, December.
    6. 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.
    7. 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.
    8. Chan, Christine M. & Du, Jialin, 2022. "Formal institution deficiencies and informal institution substitution: MNC foreign ownership choice in emerging economy," Journal of Business Research, Elsevier, vol. 142(C), pages 744-761.
    9. Zhi Shen & Francisco Puig & Justin Paul, 2017. "Foreign Market Entry Mode Research: A Review and Research Agenda," The International Trade Journal, Taylor & Francis Journals, vol. 31(5), pages 429-456, October.
    10. Christian Schwens & Florian B Zapkau & Keith D Brouthers & Lina Hollender, 2018. "Limits to international entry mode learning in SMEs," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(7), pages 809-831, September.
    11. Wei, Ziyi & Nguyen, Quyen T.K., 2017. "Subsidiary strategy of emerging market multinationals: A home country institutional perspective," International Business Review, Elsevier, vol. 26(5), pages 1009-1021.
    12. Bin Guo & Gangxiang Xu & Wen Li, 2017. "Seeking legitimacy: Chinese OFDI and domestic isomorphic pressures," Asian Business & Management, Palgrave Macmillan, vol. 16(1), pages 1-24, April.
    13. Fuming Jiang & Subramaniam Ananthram & Jizhong Li, 2018. "Global Mindset and Entry Mode Decisions: Moderating Roles of Managers’ Decision-Making Style and Managerial Experience," Management International Review, Springer, vol. 58(3), pages 413-447, June.
    14. Liou, Ru-Shiun & Chao, Mike Chen-Ho & Yang, Monica, 2016. "Emerging economies and institutional quality: Assessing the differential effects of institutional distances on ownership strategy," Journal of World Business, Elsevier, vol. 51(4), pages 600-611.
    15. Li, Linjie & Liu, Xiaming & Yuan, Dong & Yu, Miaojie, 2017. "Does outward FDI generate higher productivity for emerging economy MNEs? – Micro-level evidence from Chinese manufacturing firms," International Business Review, Elsevier, vol. 26(5), pages 839-854.
    16. 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.
    17. 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.
    18. Birgitte Grøgaard & Asmund Rygh & Gabriel R. G. Benito, 2019. "Bringing corporate governance into internalization theory: State ownership and foreign entry strategies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1310-1337, October.
    19. Clegg, Jeremy & Lin, Hsin Mei & Voss, Hinrich & Yen, I-Fan & Shih, Yi Tien, 2016. "The OFDI patterns and firm performance of Chinese firms: The moderating effects of multinationality strategy and external factors," International Business Review, Elsevier, vol. 25(4), pages 971-985.
    20. Gammeltoft, Peter & Cuervo-Cazurra, Alvaro, 2021. "Enriching internationalization process theory: insights from the study of emerging market multinationals," Journal of International Management, Elsevier, vol. 27(3).

    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:kap:asiapa:v:34:y:2017:i:1:d:10.1007_s10490-016-9459-y. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.