It Takes Two to Tango: Signaling Behavioral Intent in Service Multinationals' Foreign Entry Strategies

Published on Sep 1, 2015in Journal of International Management
· DOI :10.1016/j.intman.2015.04.001
Charles E. Stevens11
Estimated H-index: 11
(Lehigh University),
Erin E. Makarius5
Estimated H-index: 5
(College of Business Administration),
Debmalya Mukherjee16
Estimated H-index: 16
(College of Business Administration)
An unresolved tension exists in the literature on the foreign entry strategies of service multinational corporations (SMNCs). Prior research indicates that SMNCs face higher levels of transaction costs than non-service firms, making them more likely to prefer foreign entry strategies with greater hierarchy and control. Another stream of research suggests that less hierarchical entry strategies could increase SMNCs' flexibility and their ability to learn about the local environment, allowing them to adapt products and services to local needs. This suggests that there are important, underappreciated tradeoffs involved with the degree of hierarchy in SMNCs' foreign entry mode. To address this tension in the literature, we build a conceptual approach that integrates TCE with signaling theory to argue that firms' reputation for behavioral intent could have wide-ranging impacts on SMNCs' entry mode strategy and partner selection likelihood. Integrating these theories suggests the need to acknowledge that it takes “two to tango”: the attributes and preferences of both the foreign entrant and the local partner need to be factored into foreign entry strategies. We develop propositions using this integrative approach in order to contribute to further theoretical development in this important and growing stream of research.
  • References (120)
  • Citations (16)
📖 Papers frequently viewed together
1,517 Citations
67 Citations
14 Citations
78% of Scinapse members use related papers. After signing in, all features are FREE.
#1Charles E. Stevens (Lehigh University)H-Index: 11
#2En Xie (Xi'an Jiaotong University)H-Index: 16
Last. Mike W. Peng (UTD: University of Texas at Dallas)H-Index: 66
view all 3 authors...
Traditional political risk theories often focus on a developing host country government's ability to intervene in the activities of foreign multinationals in the extractive or infrastructure sectors. This results in inadequate understanding of (1) how a government's motivation to intervene is influenced by the broader societal context, (2) the importance of multinationals' political risk at home, and (3) the increasing political risk faced by high-tech and service firms. We argue that there is a...
70 CitationsSource
#1Charles E. Stevens (Lehigh University)H-Index: 11
#2Erin E. Makarius (College of Business Administration)H-Index: 5
Traditional transaction cost economics (TCE) approaches to foreign entry strategy have assumed that the information asymmetry regarding a local firm's behavioral intent cannot be overcome, thus all potential transaction partners must be treated as potentially opportunistic. However, this ‘assumption of corporate homogeneity’ results in conflicting predictions and has led researchers to question the suitability of TCE for predicting foreign entry mode. We address this controversy by developing th...
11 CitationsSource
#1Geoffrey M. Kistruck (York University)H-Index: 15
#2Shad S. Morris (BYU: Brigham Young University)H-Index: 13
Last. Charles E. Stevens (Lehigh University)H-Index: 11
view all 4 authors...
Scholars have begun to merge the transaction cost economics and capabilities perspectives to examine outsourcing decisions. Further integrating these perspectives with intermediation theory, we assert that a firm's decision to use an intermediary when entering a foreign market is largely a function of the intermediary's relative capabilities and relative transaction costs (i.e., relative advantage). We hypothesize that the intermediary's relative advantage is influenced by three significantly in...
12 CitationsSource
#1Charles E. StevensH-Index: 11
#2En XieH-Index: 16
Last. Mike W. PengH-Index: 66
view all 3 authors...
65 CitationsSource
#1Somnath Lahiri (ISU: Illinois State University)H-Index: 16
#2B. Elango (ISU: Illinois State University)H-Index: 20
Last. Sumit K. Kundu (College of Business Administration)H-Index: 24
view all 3 authors...
Despite rapid increase in cross-border acquisitions (CBAs), prior research has not examined ownership choice of foreign MNEs investing in the services sector in emerging economies. Drawing on multiple strands of literature, we posit acquirer's ownership choice (partial versus full acquisition) to be influenced by type of service offering (soft versus hard), institutional distance between acquirer and target nation, and acquirer's country-of-origin (emerging versus developed economy). Empirical a...
22 CitationsSource
#1H. Emre Yildiz (HHS: Stockholm School of Economics)H-Index: 6
Despite, or perhaps due to, its central role in international business research, cultural distance is a widely debated and criticized construct. In this paper, I will examine the conditions under which two specific assumptions regarding the cultural distance construct (viz., symmetry and discordance) can get illusionary and misleading. Understanding the reasons behind the (in)admissibility of these assumptions is especially important to guide future cross-cultural research to take necessary step...
32 CitationsSource
#1Björn Ambos (HSG: University of St. Gallen)H-Index: 22
#2Lars Hfikanson (CBS: Copenhagen Business School)H-Index: 37
The effect of distance on firms' performance when entering, operating in and across foreign markets is a central issue in international management. However, our understanding of the impact of distance has long been constrained by flawed conceptualizations and unreliable measures. The papers in this issue break new ground both by advancing our theoretical understanding and by introducing new and potentially more useful measures. In this introduction, we provide a brief overview of the evolution o...
86 CitationsSource
#1Christian Homburg (University of Melbourne)H-Index: 67
#2Marcel Stierl (UMA: University of Mannheim)H-Index: 2
Last. Torsten Bornemann (University of Stuttgart)H-Index: 8
view all 3 authors...
Despite the high relevance of corporate social responsibility (CSR) in current business practice and the considerable research on CSR outcomes in consumer markets, investigations of its influence on organizational business relationships are scarce. Relying on instrumental stakeholder theory, the authors develop and empirically test a framework of the influence of a supplier's CSR engagement on organizational customer outcomes. Findings from an examination of 200 cross-industry supplier–customer ...
135 CitationsSource
Firms choose foreign market entry timing strategies based on their perceptions and evaluations of the risks and rewards inherent with early versus late entry into that market. We expect a firm's home country culture to have a strong impact on these perceptions, resulting in systematic variation in firm entry timing strategies across firms' country of origin. To this perspective, we integrate extant research which suggests that the host country political environment will also impact entry timing....
17 CitationsSource
#1Cher-Min Fong (NSYSU: National Sun Yat-sen University)H-Index: 6
#2Chun-Ling Lee (NSYSU: National Sun Yat-sen University)H-Index: 3
Last. Yunzhou Du (AUFE: Anhui University of Finance and Economics)H-Index: 3
view all 3 authors...
This study examines the effects of consumer animosity and reputation transferability of local targets on cross-border acquisitions by analyzing host country consumer responses toward the acquisitions of local firms by foreign multinational corporations (MNCs). This work compares two host country markets: the responses of Chinese (high animosity against Japan) and Taiwanese consumers (low animosity against Japan) toward acquisition of a local firm by a Japanese MNC. The findings show that Chinese...
19 CitationsSource
Cited By16
#1Jane Lu (China Europe International Business School)H-Index: 1
#2Xueji Liang (SYSU: Sun Yat-sen University)H-Index: 1
Last. Heli Wang (Singapore Management University)H-Index: 1
view all 3 authors...
ABSTRACTBuilding on stakeholder theory, the paper argues that geographical differences in stakeholders’ reactions to corporate philanthropy lead to differences in the relationship between corporate...
2 CitationsSource
#1Hyun Gon KimH-Index: 2
#2Ajai S. GaurH-Index: 29
Last. Debmalya MukherjeeH-Index: 16
view all 3 authors...
#1Vittoria Giada Scalera (UvA: University of Amsterdam)H-Index: 9
#2Debmalya Mukherjee (University of Akron)H-Index: 16
Last. Lucia Piscitello (Polytechnic University of Milan)H-Index: 26
view all 3 authors...
Drawing on the comparative ownership framework, we perform a comparative analysis of Chinese and Indian multinational enterprises (MNEs)’ ownership strategies in knowledge-intensive cross-border acquisitions (CBAs). Specifically, we claim that due to their lower comparative ownership advantage, and the consequent higher information asymmetry, Chinese MNEs are more cautious (than Indian MNEs) in their ownership strategy. We rely on a dataset of acquisitions undertaken by high and medium-high tech...
8 CitationsSource
#1Gilberto Figueira da Silva (PUC-Rio: Pontifical Catholic University of Rio de Janeiro)H-Index: 1
#2Angela da Rocha (PUC-Rio: Pontifical Catholic University of Rio de Janeiro)H-Index: 14
Last. Jorge Ferreira da Silva (PUC-Rio: Pontifical Catholic University of Rio de Janeiro)H-Index: 12
view all 3 authors...
#2Debmalya MukherjeeH-Index: 16
Last. Ajai S. GaurH-Index: 29
view all 3 authors...
Corporate social responsibility (CSR) endeavors have been made mandatory for certain firms in India through the Companies Act, 2013. In this chapter, we focus on the nuances of this Act as it relates to CSR and discuss possible strategic implications for the Indian firms. To this end, we analyze strategic opportunities associated with mandatory CSR and identify potential challenges. Our in-depth analysis also explores avenues for future scholarly research in this area.
The purpose of this paper is to review the literature on corporate reputation and internationalization to identify key research theories, contexts, characteristics, methodologies, applications, limitations and opportunities for future research on the interlinks between these two complex constructs.,Elements of systematic literature review and bibliometric analysis were used to analyze theories, contexts, characteristics, methodologies and opportunities for future research based on 90 articles pu...
#1Ajai GaurH-Index: 1
#2Koustab GhoshH-Index: 5
Last. Qinqin ZhengH-Index: 1
view all 3 authors...
The decision regarding ethics and compliance management (ECM) adoption and its actual implementation is usually deliberated as an important corporate social responsibility (CSR) matter. Building on the strategic choice perspective, this study aims to investigate the forces and mechanisms underlying the link between ECM adoption and its substantial implementation.,The study is based on survey data of multi-national companies (MNCs) in Asia.,The authors find that firms adopt ECM initiatives due to...
5 CitationsSource
#1Ruey-Jer “Bryan” Jean (National Chengchi University)H-Index: 15
#2Danchi Tan (National Chengchi University)H-Index: 12
Despite the growing trend of internationalisation in e-business, academic research in this area is sparse. This study develops and tests a theoretical framework of the drivers of international performance for emerging market e-business firms. Specifically, we focus on the role of institutional capabilities in terms of socio-political networking and business model innovation in shaping emerging market e-business’s international performance. Based on a unique sample of Chinese e-business firms, ou...
#1Tao Bai (Xi'an Jiaotong-Liverpool University)H-Index: 2
#2Stephen Chen (Northumbria University)H-Index: 20
Last. Xiao He (University of Otago)H-Index: 1
view all 3 authors...
This study investigates how home-country political connections affect the internationalization of service firms. There are conflicting arguments in the literature on the effect of political connections on firms’ internationalization with some researchers arguing that political connections have a facilitating effect while others argue that they have a constraining effect. In this paper, we argue that which effect dominates largely depends on the type of firm–because of the importance of being loc...
#1Shufeng Simon Xiao (SDNU: Shandong Normal University)H-Index: 2
#2Yong Kyu Lew (HUFS: Hankuk University of Foreign Studies)H-Index: 8
Last. Byung Il Park (HUFS: Hankuk University of Foreign Studies)H-Index: 15
view all 3 authors...
This study combines the resource-based view of the firms and region-based view of the strategy (i.e., a 2R-based view) to shed light on the crucial roles of firm-specific resources and region-specific heterogeneity within the context of China, a large emerging economy. The study explains the variations in internationalization levels among service multinational enterprises (MNEs). Based on a large sample analysis of Chinese service MNEs, our findings demonstrate that MNEs with good cost efficienc...
1 CitationsSource