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Extending the internationalization process model: Increases and decreases of MNE commitment in emerging economies

Journal of international business studies, 2011-09, Vol.42 (7), p.894-909 [Peer Reviewed Journal]

2011 Academy of international Business ;Academy of International Business 2011 ;ISSN: 0047-2506 ;EISSN: 1478-6990 ;DOI: 10.1057/jibs.2011.25

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Title:
Extending the internationalization process model: Increases and decreases of MNE commitment in emerging economies
Author: Santangelo, Grazia D ; Meyer, Klaus E
Subjects: Business and Management ; Business management ; Business organization ; Business schools ; Business strategies ; Business Strategy/Leadership ; Business structures ; Corporate strategies ; Decision making ; Economic models ; Economic uncertainty ; Emerging markets ; Experiential learning ; Globalization ; International Business ; Internationalization ; Investment strategies ; Investors ; Management ; Management research ; Management techniques ; Multinational corporations ; Multinational enterprises ; Organization ; Organization theory ; Organizational analysis ; Organizational change ; Strategic planning ; Studies ; Subsidiaries ; Subsidiary companies ; Transition economies
Is Part Of: Journal of international business studies, 2011-09, Vol.42 (7), p.894-909
Description: The internationalization process model suggests that firms internationalize by building positions in foreign markets and networks, following iterative cycles of learning and changes in commitment. However, as subsidiaries evolve, commitments may be decreased as well as increased, a phenomenon that has rarely been studied. Moreover, it remains an open question why strategic intentions at the outset of an investment project differ from the actual operations established. We address these questions by extending the model and combining it with Mintzberg and Waters' framework of strategy formation. Specifically, we suggest that commitment decisions correspond to statements of intended strategy, while network positions correspond to realized strategies. The processes of learning, opportunity creation and trust building triggered by commitment decisions are, however, moderated by institutional influences that lead to divergences between realized and intended strategies. We test propositions derived from this framework on a survey data set of subsidiaries of multinational enterprises in Hungary, Lithuania and Poland, and find that institutional voids and institutional uncertainty affect subsidiary strategy implementation, but in opposing directions. Under high institutional uncertainty, investors prefer low commitment but flexible modes that enable later commitment increases, whereas institutional voids increase up-front information search and adaptation costs that reduce the likelihood of early post-entry adjustments. Our analysis reinforces the need for more differentiated theoretical analyses of how institutions affect business strategies over time.
Publisher: London: Palgrave Macmillan
Language: English
Identifier: ISSN: 0047-2506
EISSN: 1478-6990
DOI: 10.1057/jibs.2011.25
Source: RePEc
ProQuest Central

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Extending the internationalization process model: Increases and decreases of MNE commitment in emerging economies

2011 Academy of international Business ;Academy of International Business 2011 ;ISSN: 0047-2506 ;EISSN: 1478-6990 ;DOI: 10.1057/jibs.2011.25

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