Repeat Market Entries in the Internationalization Process: The Impact of Investment Motives and Corporate Capabilities

Frank GL Jiang, G Holburn, Paul W. Beamish

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

Research Summary: This study examines strategic and resource contingencies that shape MNEs’ country location choices. Our analysis of overseas production investments by Japanese firms (1971–2006) finds that differences in investment motives (i.e., horizontal and vertical investment) and corporate capabilities (i.e., marketing and production capabilities) moderate how prior entries into a host country affect subsequent entry decisions. In general, the positive impact of prior entries on investment in a country is weaker for horizontal investments and stronger for vertical investments. A more nuanced relationship emerges when entry decisions are analyzed in conjunction with heterogeneous corporate marketing and production capabilities. The study illustrates the novel insights to be gained from analyzing the joint impact of path dependence, managerial intentions, and corporate capabilities on country location decisions.

Managerial Summary: Multinational firms often make multiple investments over time in a concentrated set of countries, accumulating superior knowledge and capabilities in these environments. Researchers have nonetheless uncovered factors that can lead firms to deviate from strategic trajectories defined by their prior investments. In a statistical analysis of country entry decisions by Japanese manufacturing firms over a 35‐year period, we found that firms’ tendencies to reinvest in the same host countries were smaller for horizontal (i.e., market‐seeking) investments but greater for vertical (i.e., efficiency‐seeking) investments. We also found that organizational capabilities influence the geographic trajectory of international expansion: firms with stronger marketing and production capabilities were less likely to be influenced by the locations of prior entries and were more likely to invest in new countries.
LanguageEnglish
Pages1-26
JournalGlobal Strategy Journal
Early online date17 Jan 2018
DOIs
Publication statusPublished - 2 Mar 2018

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Market entry
Internationalization process
Marketing
Trajectory
Host country
Multinational firms
Marketing capabilities
International expansion
Factors
Organizational capabilities
Location choice
Contingency
Statistical analysis
Location decision
Path dependence
Manufacturing firms
Multinational enterprises
Resources
Japanese firms

Cite this

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abstract = "Research Summary: This study examines strategic and resource contingencies that shape MNEs’ country location choices. Our analysis of overseas production investments by Japanese firms (1971–2006) finds that differences in investment motives (i.e., horizontal and vertical investment) and corporate capabilities (i.e., marketing and production capabilities) moderate how prior entries into a host country affect subsequent entry decisions. In general, the positive impact of prior entries on investment in a country is weaker for horizontal investments and stronger for vertical investments. A more nuanced relationship emerges when entry decisions are analyzed in conjunction with heterogeneous corporate marketing and production capabilities. The study illustrates the novel insights to be gained from analyzing the joint impact of path dependence, managerial intentions, and corporate capabilities on country location decisions.Managerial Summary: Multinational firms often make multiple investments over time in a concentrated set of countries, accumulating superior knowledge and capabilities in these environments. Researchers have nonetheless uncovered factors that can lead firms to deviate from strategic trajectories defined by their prior investments. In a statistical analysis of country entry decisions by Japanese manufacturing firms over a 35‐year period, we found that firms’ tendencies to reinvest in the same host countries were smaller for horizontal (i.e., market‐seeking) investments but greater for vertical (i.e., efficiency‐seeking) investments. We also found that organizational capabilities influence the geographic trajectory of international expansion: firms with stronger marketing and production capabilities were less likely to be influenced by the locations of prior entries and were more likely to invest in new countries.",
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Repeat Market Entries in the Internationalization Process: The Impact of Investment Motives and Corporate Capabilities. / Jiang, Frank GL; Holburn, G; Beamish, Paul W.

In: Global Strategy Journal, 02.03.2018, p. 1-26.

Research output: Contribution to journalArticle

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