AIB 2012 Conference Proceedings - Academy of International ...

MONDAY
Session: 2.2.11 - Interactive
Track: 3 - IB Theory, FDI, and Entry Mode
Multiple Entry Perspectives
Presented On: July 2, 2012 - 10:45-12:00
Chair: Deepak K Datta, University of Texas at Arlington
Where Experience Matters More: Effects of Learning on Value Creation in Cross-Border Acquisitions by U.S.
Firms in the Service Industry
Dynah A. Basuil, Asian Institute of Management
Deepak K Datta, University of Texas at Arlington
Based on a sample of 312 cross-border acquisitions by U.S. firms in the service sector, our study examines the
impact of industry knowledge and cross-border acquisition experience on shareholder value creation. We used
the BHAR (buy and hold abnormal returns) methodology to assess the extent of value creation in the year
following an acquisition. Our findings indicate that both industry knowledge and cross-border acquisition
experience (number of cross-border acquisitions undertaken in the five years prior to the acquisition) are
positively associated with shareholder value creation; however, the relationships are contingent on cultural
distance. Our analyses indicate that the positive effects are more pronounced when cultural distance is low,
than when it is high. Implications of our findings from the standpoint of researchers and practitioners are
discussed. (For more information, please contact: Dynah A. Basuil, Asian Institute of Management, Philippines:
dbasuil@aim.edu)
Entry Mode and Distance: An Experimental Investigation of a Contentious Relationship
Douglas Dow, University of Melbourne
Daniel Baack, University of Denver
Ronaldo Parente, Florida International University
This paper adopts an experimental approach to explore the role of psychic distance in international entry mode
choice. By directly measuring manager's a priori perceptions the psychic distance using best worst scaling, the
results indicate that perceptions of psychic distance play a significant role as a source of external uncertainty
during foreign investment decisions. In a similar fashion, the tacit nature of the knowledge transferred during
the investment is a major source of internal uncertainty; however, psychic distance does not appear to influence
the magnitude of the internal uncertainty. (For more information, please contact: Douglas Dow, University of
Melbourne, Australia: d.dow@mbs.edu)
Choice of Foreign Market Entry Mode: The Moderating Effect of Cultural Distance on Separability and Foreign
Expansion
Maziar Raz, University of Western Ontario
This paper investigates the moderating effect of cultural distance on the relationship between separability and
choice of foreign entry mode. To that aim, it compares 11740 cases of Japanese foreign direct investment into
manufacturing and service industries (retail trade, wholesale trade, and finance and insurance). The empirical
model supports the hypothesis that in service firms, where separability of production and consumption is low,
increase in cultural distance reduces the likelihood of entry by a wholly owned subsidiary. From these results,
this paper draws implications for the literature on internationalization of service firms. (For more information,
please contact: Maziar Raz, University of Western Ontario, Canada: mraz.phd@ivey.ca)
AIB 2012 Conference Proceedings
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