The Impact of Institutional Distance on the Choice of Multinational Enterprise’s Entry Mode: Theory and Empirical Evidence from Vietnam

IF 0.8 Q4 BUSINESS, FINANCE

Asian Journal of Business and Accounting Pub Date : 2018-06-27 DOI:10.22452/AJBA.VOL11NO1.3

Vo van Dut, Yusaf H. Akbar, N. H. Dang, Nguyen Kim Hanh

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引用次数: 7

Abstract

Manuscript type: Research paper. Research aims: This study aims to investigate the impact of insti- tutional distance between home and host countries on the choice of multinational enterprise’s (MNE) entry mode into Vietnam. Design/ Methodology/ Approach: Transaction cost theory was adopted to develop the hypotheses. The data of 82 MNE subsidiaries located in Vietnam were extracted from the World Bank Enterprise Survey. Probit regression was employed to estimate the impact of the institutional distance between home and host countries on the choice of the MNE’s entry mode. Research findings: The empirical results support the hypotheses, revealing that MNEs are more likely to enter Vietnam via acquisition investment rather than greenfield investment. This happens when both the formal and informal institutional distance between Vietnam and the home countries is large. Findings also suggest that the institutional distance between a host country with a transition economy and the home countries is an important element to take into account when MNEs decide to invest in a transition economy that contains high level uncertainties. Theoretical contributions/ Originality: The adoption of the trans- action cost theory enables this study to conceptualise the frame- work which is used to empirically test the effect of the institutional distance between Vietnam and home countries on the MNEs’ entry mode decision. This study shows that the transaction cost approach offers insights into how the institutional distance between the host and home countries affect the choice of the MNEs’ entry mode into a transition economy. This study contributes to international business literature by developing theoretical arguments about the role of the national institutional dissimilarities on the choice of the MNEs’ entry mode in a transition economy. Practitioner/ Policy implications: The implication drawn from this study is that MNEs investing through acquired subsidiaries are less burdened by environmental uncertainties since acquired subsidiaries offer more familarity with the formal institutions. This can help the MNEs to establish a close relationship with the local partners and the government. This also increases the MNEs’ cross-cultural communication and knowledge thereby, enhancing the investment. Research limitation: Further research should consider more parent firm characteristics so that implications for the MNEs’ entry strategy are developed. Given the role of the different managers at the different levels, future study should capture the perception of these managers who are based at the headquarters so as to further examine the effect of institutional distance. Keywords: Formal Institutional Distance, Informal Institutional Distance, Entry Mode, MNE, Subsidiary, Transition Economy. JEL Classification: F23, M16

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制度距离对跨国企业进入模式选择的影响:来自越南的理论与经验证据

稿件类型:研究论文。研究目的:本研究旨在探讨母国与东道国之间的制度距离对跨国企业进入越南的模式选择的影响。设计/方法/途径:采用交易成本理论来发展假设。位于越南的82家跨国公司子公司的数据摘自世界银行企业调查。采用Probit回归估计母国和东道国之间的制度距离对跨国公司进入模式选择的影响。研究发现:实证结果支持假设，跨国公司更有可能通过收购投资而不是绿地投资进入越南。当越南和母国之间的正式和非正式制度距离很大时，这种情况就会发生。调查结果还表明，当跨国公司决定投资于具有高度不确定性的转型经济时，转型经济东道国与母国之间的制度距离是需要考虑的一个重要因素。理论贡献/独创性:交易成本理论的采用使本研究能够将框架概念化，该框架用于实证检验越南与母国之间的制度距离对跨国公司进入模式决策的影响。本研究表明，交易成本方法为东道国和母国之间的制度距离如何影响跨国公司进入转型经济的进入模式的选择提供了见解。本研究通过提出关于国家制度差异对跨国公司在转型经济中进入模式选择的作用的理论论点，为国际商业文献做出了贡献。从业者/政策启示:本研究得出的启示是，通过收购子公司进行投资的跨国公司受环境不确定性的负担较小，因为收购子公司更熟悉正式制度。这可以帮助跨国公司与当地合作伙伴和政府建立密切的关系。这也增加了跨国公司的跨文化交流和知识，从而增加了投资。研究局限:进一步的研究应考虑更多的母公司特征，以便对跨国公司的进入战略产生影响。鉴于不同层次的不同管理人员的作用，未来的研究应捕捉总部这些管理人员的看法，以便进一步研究机构距离的影响。关键词:正式制度距离，非正式制度距离，进入模式，跨国公司，子公司，转型经济。JEL分类:F23, M16

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来源期刊

Asian Journal of Business and Accounting BUSINESS, FINANCE-

CiteScore

2.00

自引率

11.10%

发文量

期刊介绍： An academic journal that aims to advance knowledge in the business and accounting disciplines, to narrow the gap between theory and practice, and to set direction for policy initiatives in Asia. Welcome to the Asian Journal of Business and Accounting (AJBA). AJBA is an international refereed journal, published biannually (30th June and 30th December) by the Faculty of Business and Accountancy, University of Malaya, Malaysia. AJBA aims to publish scholarly business researches that are relevant to Malaysia and the Asian region. It intends to highlight the practical implications in promoting better business decision making process and the formulation of public policy in Asia. This journal publishes theoretical, conceptual, and empirical papers within the broad areas of business and accounting in Asia. The AJBA covers a broad spectrum of the business and accounting disciplines. A suggestive (though not necessarily comprehensive) list of areas that would be included in this journal are: general management, strategic management, human resource management, organizational behaviour, labour and industrial relations, international business management, business communication, entrepreneurship, leadership, management science, operations management, production management, supply chain management, marketing management, brand management, consumer behaviour, information management, e-marketing, e-commerce, quality management, retailing, service marketing, hospitality management, hotel and tourism management, asset pricing, capital and money markets, corporate finance, derivatives markets, finance and banking, financial economics, etc.