Session Details: Session 1004

Foreign Entry Modes

Track G

Date: Wednesday, October 15, 2008


Time: 10:00 – 11:15


Room: Salon 23

Session Chair:
Christiane Prange, Tongji University

Title: Evaluating the Choice between International Joint Ventures and Divestitures: Evidence from Host Country Executives


  • Tony Tong, University of Colorado-Boulder
  • Jeffrey Reuer, University of Colorado, Boulder
  • Beverly Tyler, North Carolina State University
  • Shujun Zhang, Sun Yat-sen University

Abstract: Prior research has studied the choice between JVs and acquisitions from the perspective of home country firms. Little research, however, has investigated the governance decision that host country firms have to make concerning undertaking JVs as opposed to divestitures. In this paper, we contribute to research on governance choice in foreign direct investment in two ways. First, we examine factors that affect host country executives’ decisions on the choice between JVs and divestitures by applying multiple theoretical perspectives. Second, we use the policy capturing technique to obtain insights into the cognitive processes of executives as they make governance decisions. Results indicate that executives largely behave the way theory suggests. In addition, executives are also somewhat limited in their cognitive ability to incorporate all of the available information in the theories, suggesting the importance of behavioral dimensions in executive decision making.

Title: Presumptive Adaptation of Foreign Franchise Practices in China


  • Gabriel Szulanski, INSEAD
  • Wei-Ru Chen, INSEAD

Abstract: This research studies adaptation and modification of long-developed business model and practices when foreign franchises enter into China. Franchise expansion is advised to comply strictly with original successful model. However, emerging economies like China is deemed very different in culture and consumer behaviors by many foreign enterprise, thus local adaptation seems inevitable. Based on in-depth analysis of five foreign franchise systems in China, we explore whether foreign franchises should alter their business models or practices due to the very different local condition in China, and if they do, when and what. This research contributes to the understanding of cross border transfer of best practice in two different institutional contexts. Its implication can also be applied to the similar decisions in other emerging economies.

Title: The Diffusion of Firm Divestment from Burma, 1996-2002


  • Sarah Soule, Stanford University
  • Laszlo Tihanyi, Texas A&M University
  • Anand Swaminathan, Emory University

Abstract: We analyze the factors that lead multinational firms to divest from Burma between 1996 and 2002. We attempt to disentangle the influence on the divestment rate of firm-specific factors, home-country-specific factors and diffusion processes. We find that the political and economic climate of the home country of a multinational firm profoundly impact a firm’s decision to sever ties to Burma. We also find that that divestment decisions diffused, but the pattern of diffusion was structured along country characteristics rather than firm-level characteristics.

Title: The Relationship between Country Culture and Alliance Termination: Evidences form the Information Technology Industry


  • Dong Chen, Loyola Marymount University
  • Goce Andrevski, Queen's University
  • Emery Yao, Peking University

Abstract: In this study we examined how different dimensions of national culture affect firms’ likelihood to terminate strategic alliances. We proposed that firms from countries with low power distance, high individualism, high masculinity, low uncertainty avoidance and low long-term orientation will exhibit higher propensity of alliance termination. We also hypothesized that the type of alliance (equity versus non-equity) will moderate these relationships. Applying discrete-time hazard analysis, we tested our propositions on a sample of 443 alliances in information technology industry over the period 1953 to 1989. Our findings showed that not all five cultural dimensions are strongly associated with alliance termination, and such effect is again contingent on the type of alliance.

All Sessions in Track G...

Sun: 10:00 – 11:30
Session 1503: Explaining Knowledge Flows within the MNC: Organizational vs. Individual-Level Perspectives
Sun: 13:00 – 14:30
Session 1603: Internationalization among Financial Service Firms
Sun: 15:00 – 16:30
Session 1703: Exploring the Limits of Corporate Social Responsibility
Mon: 11:15 – 12:30
Session 1010: Internationalization Strategy
Mon: 15:30 – 16:45
Session 1002: Competing in a Global Economy
Mon: 17:00 – 18:15
Session 1000: Knowledge Flows in MNCs
Session 1005: Emerging Markets
Tue: 11:15 – 12:30
Session 1003: International Knowledge Diffusion
Session 1110: Social Issues in International Business
Tue: 14:30 – 15:45
Session 1001: MNC Structure
Session 1009: Under Assault: How Companies Can Fight Organized Crime
Wed: 10:00 – 11:15
Session 1004: Foreign Entry Modes
Wed: 11:30 – 12:45
Session 1008: The Impact of Climate Change: Lessons from the Field
Session 1084: Internationalization of Research and Development (R&D)

Strategic Management Society

Cologne Conference