AIB 2012 Conference Proceedings - Academy of International ...

MONDAY
Success in Entry Mode Choice in a High Animosity Host Country Market
Cher-Min Fong, National Sun Yat-sen University
Chun-Ling Lee, National Sun Yat-sen University
Yunzhou Du , Anhui University of Finance & Economics
Drawn on the institutional perspective, this study investigates the effects of the choice of entry mode
(greenfield vs. joint venture), the ownership arrangement of international joint venture (IJV) (majority vs.
minority), and the selection of local partner (positive reputation vs. negative reputation) on gaining market
legitimacy (acceptance by local consumers) in the host country by a multinational corporation (MNC) from an
animosity-evoking home country. Specifically, this work investigates Chinese consumers' (with high animosity
against Japan) responses toward the products of a Japanese wholly owned subsidiary and four Japanese-
Chinese joint venture firms with different ownership structures and local partners. The results show that
Chinese consumers have higher product purchase intentions if the Japanese MNC adopts a joint-venture entry
mode than a greenfield entry mode. Furthermore, Chinese consumers exhibit higher product purchase
intentions when the Japanese partner has minority equity as opposed to having majority equity in the IJV. With
respect to local partner selection, Chinese consumers demonstrate higher product purchase intentions for an
IJV in which the local partner is a positive reputation firm. Theoretical and practical implications of the findings
are discussed. (For more information, please contact: Chun-Ling Lee, National Sun Yat-sen University, Taiwan:
d934010005@student.nsysu.edu.tw)
Determinants of Foreign Direct Investments (FDI) Ownership Mode Choice in China: Evidence from Nordic
Manufacturing Investment
Yi Wang, University of Vaasa
Jorma Larimo, University of Vaasa
This study analyzes factors influencing the choice of Nordic manufacturing firms (Denmark, Finland, Norway,
and Sweden) between international joint venture (IJV) and wholly-owned subsidiary (WOS) of their subsidiaries
in China. The sample consists of 254 manufacturing investments made by 115 Nordic firms in a period of 1982-
2008. The empirical analysis of this study indicates that R&D intensity, internationally experienced firms, degree
of diversification of the investing firm and subsidiaries operating in resource-intensive industry increased the
propensity of Nordic firms to choose international joint ventures. Whereas business experience in China,
subsidiary location (SEZs and open coastal cities), deregulated host government policy toward FDI and
Greenfield investments positively associated with increased probability of Nordic firms to choose wholly-owned
subsidiary. Further on, cultural distance, parent firm size and country of origin provide no marginal information
for predicting ownership mode choice of Nordic MNEs entering China. This study also supports the view that
host government investment polices interact with some transaction cost variables to influence ownership mode
choice of MNEs entering to China. (For more information, please contact: Yi Wang, University of Vaasa, Finland:
wyi@uwasa.fi)
Service Characteristics as Moderators of the Entry Mode Choice: Empirical Evidence in the Hotel Industry
Jose Pla-Barber, University of Valencia
Cristina Villar, University of Valencia
Fidel León-Darder, University of Valencia
Although a considerable amount of research has explored the entry mode choice, results regarding the direct
influence of some variables on the entry mode choice evince a lack of a clear consistency. By introducing the
moderator effect of the nature of the services being provided by the firm, we explain some of these inconclusive
results. We use a comprehensive database on the Spanish hotel industry which covers practically all the
operations carried out by the majority of Spanish hotel chains up to 2011. We found that both intangibility and
complexity of the services offered by the hotel moderate the relationship between environmental uncertainties
and entry mode choice by increasing the propensity to use greater commitment entry modes when faced with
AIB 2012 Conference Proceedings
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