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Wholly Owned Subsidiary Versus Technology Licensing in the Worldwide Chemical Industry

Published on Dec 1, 2000in Journal of International Business Studies 7.72
· DOI :10.1057/palgrave.jibs.8490922
Ashish Arora43
Estimated H-index: 43
(CMU: Carnegie Mellon University),
Andrea Fosfuri25
Estimated H-index: 25
(Charles III University of Madrid)
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Abstract
This paper empirically analyzes the determinants of the choice between wholly owned subsidiary and technology licensing as a strategy for expansion abroad. We use a new and comprehensive database on worldwide plant level investments in the chemical industry during the 1981 – 1991 period. We find that both cultural distance and the presence of other potential licensors favor the use of licensing as a strategy for expanding abroad, whereas, prior experience favors the choice of wholly owned subsidiary. An implication of this study is that competition in the market for technology can foster the international diffusion of technology through the use of arm's length agreements.© 2000 JIBS. Journal of International Business Studies (2000) 31, 555–572
  • References (29)
  • Citations (115)
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References29
Newest
Published on Jun 1, 2001in Journal of Development Economics 2.85
Ashish Arora43
Estimated H-index: 43
(CMU: Carnegie Mellon University),
Andrea Fosfuri25
Estimated H-index: 25
(Charles III University of Madrid),
Alfonso Gambardella39
Estimated H-index: 39
(Sant'Anna School of Advanced Studies)
Abstract In this paper we study how the development of specialized upstream technology suppliers in leading countries improves technology access and lowers investment costs for downstream firms in follower countries. We test this idea using a novel database covering all investments in chemical plants in less developed countries (LDCs) during the 1980s. We find that investments in chemical plants in the LDCs are greater, the greater is the number of technology suppliers that operate in the first ...
Published on Sep 1, 1998in Journal of International Business Studies 7.72
Jean-François Hennart41
Estimated H-index: 41
(UIUC: University of Illinois at Urbana–Champaign),
Jorma Larimo15
Estimated H-index: 15
(University of Vaasa)
This paper tests the proposition that national origin affects the strategies of multinational enterprises by looking at the determinants of the choice they make between entering the United States through partially versus wholly owned subsidiaries. We pool entries into the United States made by firms based in two countries, Japan and Finland, which differ both in their cultural characteristics and in their cultural distance to the United States. After carefully controlling for the known firm and ...
Published on Jun 1, 1998in Journal of International Business Studies 7.72
Farok J. Contractor27
Estimated H-index: 27
(RU: Rutgers University),
Sumit K. Kundu23
Estimated H-index: 23
(SLU: Saint Louis University)
In the new management landscape, where interfirm collaborations are common, international companies today have fully owned operations and equity joint ventures, as well as non-equity alliances, which in the service sector include franchising and management service agreements. What determines the optimum choice of organizational mode? The new syncretic theory developed in this paper combines concepts from transaction costs theory, agency theory, corporate knowledge and organizational capability t...
Published on Jun 1, 1997in Journal of International Business Studies 7.72
Kent Eriksson21
Estimated H-index: 21
(Uppsala University),
Jan Johanson47
Estimated H-index: 47
(Uppsala University)
+ 1 AuthorsD. Deo Sharma21
Estimated H-index: 21
(Umeå University)
Using a behavioral approach, this study identifies and delineates components of experiential knowledge in the internationalization process. Three hypotheses are developed and tested. They center around the lack of knowledge in the areas of foreign business, foreign institutions and firm internationalization, as well as the effect that this lack of knowledge has on managers' perceived cost in the internationalization process. With the help of a LISREL-based structural model, the three hypotheses ...
Published on Jan 1, 1997in Journal of International Business Studies 7.72
Kent Eriksson21
Estimated H-index: 21
(Uppsala University),
Jan Johanson47
Estimated H-index: 47
(Umeå University)
+ 1 AuthorsD. Deo Sharma21
Estimated H-index: 21
In furthering our understanding of the dynamics of the internationalization of firms, process models have played a significant role [Bilkey and Tesar 1977; Cavusgil 1980, 1984; Czinkota 1982; Johanson and Vahlne 1977, 1990; Luostarinen 1980; Reid 1983]. In these models, market-specific experiential knowledge is central in explaining the firm’s internationalization process. A vast amount of research, using the concept of experiential knowledge, on the internationalization process and the choice o...
Published on Feb 1, 1996in Academy of Management Journal 7.19
Scott Shane65
Estimated H-index: 65
(Georgia Institute of Technology)
This study proposes that hybrid organizational forms provide a way to overcome the agency problems of adverse selection and moral hazard in selecting, assimilating, and monitoring new managers. Con...
Published on Apr 1, 1994in Management Science 4.22
Von Hippel E51
Estimated H-index: 51
(MIT: Massachusetts Institute of Technology)
To solve a problem, needed information and problem-solving capabilities must be brought together. Often the information used in technical problem solving is costly to acquire, transfer, and use in a new location-is, in our terms, "sticky." In this paper we explore the impact of information stickiness on the locus of innovation-related problem solving. We find, first, that when sticky information needed by problem solvers is held at one site only, problem solving will be carried out at that locus...
Published on Mar 1, 1994
Franklin R. Root1
Estimated H-index: 1
The New Global Economy: Challenges and Opportunities. Designing Entry Strategies for International Markets. Deciding on the International Product Candidate and Target Market. Entering International Markets Through Exports. Entering International Markets Through Licensing and Other Contractual Arrangements. Entering International Markets Through Investment. Deciding on the Right Entry Mode. Designing the International Marketing Plan. Designing and Managing Entry Strategies Across Cultural Differe...
Published on Dec 1, 1993in Journal of International Business Studies 7.72
Bruce Kogut47
Estimated H-index: 47
(UPenn: University of Pennsylvania),
Udo Zander16
Estimated H-index: 16
(HHS: Stockholm School of Economics)
Firms are social communities that specialize in the creation and internal transfer of knowledge. The multinational corporation arises not out of the failure of markets for the buying and selling of knowledge, but out of its superior efficiency as an organizational vehicle by which to transfer this knowledge across borders. We test the claim that firms specialize in the internal transfer of tacit knowledge by empirically examining the decision to transfer the capability to manufacture new product...
Published on Jan 1, 1993in Journal of Economic Behavior and Organization 1.40
Srinivasan Balakrishnan4
Estimated H-index: 4
(UMN: University of Minnesota),
Mitchell P. Koza2
Estimated H-index: 2
(Ad: INSEAD)
Abstract We propose that intermediate forms of organization like joint-ventures are superior to markets and hierarchies when the costs of valuing complementary assets are non-trivial. By allowing piecemeal transactions under shared ownership and control, joint-ventures can reduce these costs significantly. Our theory is supported by the results of a cross-sectional analysis of the abnormal returns to the parent firms in 64 joint-venture announcements and 165 merger announcements.
Cited By115
Newest
Marina Papanastassiou16
Estimated H-index: 16
(Middlesex University),
Robert Pearce23
Estimated H-index: 23
(University of Reading),
Antonello Zanfei20
Estimated H-index: 20
(University of Urbino)
Internationalization of R&D and innovation by multinational enterprises (MNEs) has undergone a gradual and comprehensive change in perspective over the past 50 years. From sporadic works in the late 1950s and in the 1960s, it became a systematically analyzed topic in the 1970s, starting with pioneering reports and “foundation texts”. Our review unfolds the theoretical and empirical evolution of the literature from dyadic interpretations of centralization versus decentralization of R&D by MNEs to...
Published in European Management Journal 2.98
Emna Moalla1
Estimated H-index: 1
,
Ulrike Mayrhofer (University of Nice Sophia Antipolis)
Abstract The objective of this article is to examine the relevant dimensions of distance for foreign market entry mode choice. Based on a sample of 203 interfirm linkages formed by French multinationals with partners across the world, we analyze the impact of four dimensions of distance on the choice between cooperative alliances and mergers-acquisitions. The findings indicate that administrative and economic distance have a significant influence on market entry mode choice, whereas the impact o...
Published on Nov 1, 2018in Journal of Purchasing and Supply Management 3.09
Li Wan (University of Udine), Guido Orzes10
Estimated H-index: 10
(Free University of Bozen-Bolzano)
+ 2 AuthorsGuido Nassimbeni22
Estimated H-index: 22
(University of Udine)
Abstract The Entry Mode (EM) choice is a fundamental issue in reshoring initiatives. Despite several authors have studied the determinants of offshoring EM, no study has investigated so far the factors affecting the reshoring EM and its relation with the offshoring EM. The purpose of this paper is to examine which factors influence entry mode choice in reshoring initiatives. We develop a conceptual framework that explains the reshoring EM in terms of country-, industry-, firm- and project-specif...
Published on Jul 1, 2018in Research Policy 5.42
Valérie Duplat3
Estimated H-index: 3
(VU: VU University Amsterdam),
Régis Coeurderoy9
Estimated H-index: 9
(ESCP Europe),
John Hagedoorn39
Estimated H-index: 39
(UM: Maastricht University)
In fast-paced and knowledge-intensive environments, licensing partnerships can be powerful levers for market expansion. Research on the management of technology-oriented licenses has nonetheless pointed out the risks of corrosive disputes caused by conflicting interests or misunderstandings among licensing partners. The choice made ex ante on mechanisms for resolving potential disputes is of prime importance in the execution of licensing exchanges. Although the legal literature has widely emphas...
Published on Apr 3, 2018in Business Process Management Journal
Antonio Toma2
Estimated H-index: 2
(University of Salento),
Giustina Secundo11
Estimated H-index: 11
(University of Salento),
Giuseppina Passiante12
Estimated H-index: 12
(University of Salento)
Purpose The purpose of this paper is to highlight the main Intellectual Property (IP) protection strategies adopted in the R&D phases of a company operating in the bio-pharmaceutical industry, according to an open innovation (OI) approach. Design/methodology/approach In order to assess how R&D intensive firms adopt IP strategies during OI practices, this research uses a single case-study design. The case has been studied over an extended period of time (from 2008 to 2015), triangulating data and...
Published on Oct 20, 2017in The International Trade Journal
Zhi Shen2
Estimated H-index: 2
(University of Valencia),
Francisco Puig6
Estimated H-index: 6
(University of Valencia),
Justin Paul10
Estimated H-index: 10
(UPR: University of Puerto Rico)
This article gives a retrospective look at the main determinants of foreign market entry modes and examines the variables and conditions used in empirical studies in this stream of research. We found that there is an “analytical context hazard” in past studies. The findings suggest: first, future research should focus on developing and extending theories with reference to strategy dimension and market/industry environment; second, the interrelationship between the main entry mode determinants sh...
Published on Sep 1, 2017in Journal of International Business Studies 7.72
Olena Ivus6
Estimated H-index: 6
(Queen's University),
Walter G. Park27
Estimated H-index: 27
(AU: American University),
Kamal Saggi31
Estimated H-index: 31
(Vandy: Vanderbilt University)
Using data on U.S. firms' technology licensing to local agents in developing countries, this paper examines the impact of patent protection on internal and arms-length technology transfer. The effects of protection vary across products according to their complexity. Consistent with theories of internalization, we find that patent reforms enable local firms to attract more arms-length technology transfer, especially of simple products which are relatively easy to imitate. Affiliated licensing als...
Published on Aug 25, 2017
Organizational capabilities are key factors for business survival in a rapidly changing business environment. When the firms apply or adapt new marketing strategy appropriate with business changing, they will have more likely be better in marketing performance. Alternative marketing strategy is a capability of a firm, it is a crucial driver of competitive advantage, and it leads to marketing survival. This research aims to examine the relationship between each dimension of alternative marketing ...
Published on Feb 1, 2017in Business & Society 5.01
María Bermúdez-Edo8
Estimated H-index: 8
(University of Surrey),
Nuria Hurtado-Torres12
Estimated H-index: 12
(UGR: University of Granada),
Natalia Ortiz-de-Mandojana1
Estimated H-index: 1
(UIB: University of the Balearic Islands)
The literature on the natural-resource-based view of firms has mostly focused on the positive relationship between financial performance and environmental innovation. The present study extends this research by addressing recent calls to identify the specific managerial approaches that affect a firm’s ability to financially benefit from an innovative environmental strategy. In particular, the focus is on how the selected international scope of patented environmental innovations affects a firms’ f...