AIB 2012 Conference Proceedings - Academy of International ...

MONDAY
Existing knowledge about the specific trade barriers that undermine firm performance in emerging markets,
particularly those in the Central and Eastern European region, is fragmented. In this paper, we empirically
investigate of the differences in the perceived business environments of two countries, namely Australia and
Ukraine, and how they could undermine the potential for further business operations of internationalized firms.
In depth interviews with executives of nine companies involved in business between Australia and Ukraine as
well as industry experts. The findings suggest that the perceptions of environmental barriers by the Australian
firms match the views expressed by Ukrainian businesses, in that Ukraine presents barriers to
internationalization that are distinct to other emerging markets. Political instability remains the main obstacle
and is considered above macroeconomic variations or other factors that undermine the relations with Australia.
(For more information, please contact: Genrikh Salata, Australian National University, Australia:
genrikh.salata@anu.edu.au)
When Will International Joint Ventures be Inflexible to Exit
Sungjin J. Hong, University of Texas at Dallas
Seung-Hyun Lee, University of Texas at Dallas
This paper aims to identify boundary conditions of real options theory in the context of international joint
ventures (IJVs). Drawing upon institutional perspective and experiential learning perspective, we argue that
IJVs will provide high divestment flexibility when environmental uncertainty is high and legitimacy pressures are
low. If normative and regulative legitimacy pressures are high, IJVs would not provide high divestment flexibility
even if host country economic environments are volatile. In a similar vein, we argue that, even though prior
country and partner specific experience would reduce perceived uncertainties in the host country, increased
legitimacy gained through prior experience would also raise the expected level of local legitimacy and
embeddedness for those foreign parents of IJVs. Therefore, reduced perceived uncertainties may not
necessarily lead to higher IJV divestment flexibility. (For more information, please contact: Sungjin J. Hong,
University of Texas at Dallas, USA: sungjin@utdallas.edu)
Session: 2.3.12 - Interactive
Track: 10 - Economics, Finance and Accounting
Corporate Governance
Presented On: July 2, 2012 - 13:00-14:15
Chair: Ursula F. Ott, Loughborough University
An Exploratory Study on the Impact of Economic Development on the Relationship between Cultural Differences
and Foreign Direct Investment
Yener Kandogan, University of Michigan-Flint
The literature has long analyzed the effects of national cultural distance on the volume of cross-border foreign
direct investments (FDI). Considering the increase in significance of FDI originating from emerging countries,
this study compares the effect of cultural differences on the stock of FDI from and to countries of various levels
of economic development to explain how level of economic development affect the impact of cultural distance
on FDI. Results suggest that the cultural differences tend to be bigger barriers for multinationals from emerging
countries, but they also learn quickly how to deal with such differences. (For more information, please contact:
Yener Kandogan, University of Michigan-Flint, USA: yener@umflint.edu)
AIB 2012 Conference Proceedings
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