Jorma Larimo

Challenging the Conceptualization and Measurement of Distance and International Experience in Entry Mode Choice Research

Although international entry mode choice has been extensively studied, the empirical results regarding two key antecedents—various forms of distance and international experience—have been equivocal. The authors argue that the conceptualization and measurement of these variables may be contributing to the ambiguous results. They demonstrate that a broader conceptualization of the underlying factors driving the distance construct substantially increases the ability to predict entry mode. Furthermore, when a refined interpretation of international experience is employed, only experience in similar countries affects entry mode selection. Experience in dissimilar countries seems to have no predictive power. These results call for a radical change in how these two key constructs should be operationalized in further entry mode research.

Form of investment by Nordic firms in world markets

Abstract The goal of this study is to analyze the forms of entry of Nordic firms in world markets, and to analyze how different characteristics related to the investing firm (parent), the target industry, and the host (target country), are related to the decision regarding entry form. A second goal is to analyze the similarities and differences in form of entry among firms from different Nordic countries. This is the first large sample study focusing on form of entry behavior by firms from various Nordic countries. Of the 11 variables related to investing firm, industry, and target country reviewed in the study, nine are significantly related to the form of the investment. Furthermore, the results indicate both similarities and differences in the behaviors of firms from various Nordic origins.

Greenfield Investments or Acquisitions: Impacts of Institutional Distance on Establishment Mode Choice of Multinational Enterprises in Emerging Economies

ABSTRACT The authors analyze the impacts of formal and informal institutional distance on establishment mode choice of multinational enterprises (MNEs) using a sample of 343 foreign direct investments (FDIs) made in selected emerging economies of Central and Eastern Europe, Asia, and Latin America by the Finnish MNEs. This study contributes to conceptualization and operationalization of institutional distance as well as its application in international business studies. The empirical analysis revealed that high informal institutional distance results in preference of greenfield investments by the Finnish MNEs as the authors hypothesized. However, the authors also found that high formal institutional distance results in preference of acquisitions, which is opposite the study hypothesis as well as the findings of previous studies addressing similar issues.

Ownership Strategy of Multinational Enterprises and the Impacts of Regulative and Normative Institutional Distance: Evidence from Finnish Foreign Direct Investments in Central and Eastern Europe

This study is one of the first to address the ownership strategy of multinational enterprises from the Nordic region using the concepts of regulative and normative institutional distance. This study contributes to the application of the institutional distance concept in foreign market entry studies. The results of our study challenge some of the findings of the previous studies due to unique sample and settings of the study. Based on a sample of 345 foreign direct investments (FDIs) made by 122 Finnish firms in 11 Central and Eastern European countries during 1990–2007, we found out that high normative institutional distance leads to the preference for wholly owned subsidiaries, which is opposite to our hypothesis and findings of previous studies. Moreover, the impacts of regulative institutional distance and international experience of the firm on ownership strategy are found to be nonsignificant in our study.

Different Types of Exporting SMEs: Similarities and Differences in Export Performance

Research related to firm export performance dates back to the early 1960s, ever since many studies have been conducted with mixed results. The three main goals of the present study were to analyze (1) the impact of the selected firm, management, and the export strategy-related variables on the export performance; (2) the possible variation in the results depending on the measure of export performance; and (3) the similarities and differences in the results depending on the type of SME – traditional exporters vs. born international companies. Based on a literature review, 14 hypotheses were developed to be tested. Consequently, the empirical part of the study is based on a survey conducted among Finnish SMEs in early 2002. The export performance was analyzed using six different types of performance measures. None of the 14 hypotheses were fully supported by all employed measures of performance. However, the export performance was positively impacted by firm size, product/service quality, international orientation, and market diversification along five measures. Additionally, the study indicated some similarities, but also some differences depending on the measure of export performance, type of the exporting SME, and the operationalizations used for the born international companies. Based on the results, management implications and proposals for future research are presented.

Strategic motivations of Finnish FDIs in Asian countries

Purpose – To empirically investigate how the location‐specific variables and strategic motives influence the ownership strategies of Finnish manufacturing firms in ten South and Southeast Asian countries from 1980 to 2000.Design/methodology/approach – Because of the nature of the dependent and independent variables, the binomial logit model is used in the analysis. The regression coefficient estimates the impact of independent variables on the probability that the wholly owned subsidiary (WOS) is market, efficiency and/or a risk‐reduction seeking type of foreign direct investment (FDI). A positive sign for the coefficient means that the variable increases the probability of choosing WOS and undertaking a certain type of investment.Findings – The research results indicate that the low cultural distance, large market size, and high levels of economic welfare in the target country increases the probability of choosing WOS in order to undertake market‐seeking and efficiency‐seeking FDIs. Similarly the low lev...

Determinants of foreign direct investment ownership mode choice: Evidence from Nordic investments in Central and Eastern Europe

This paper addresses the determinants of foreign direct investment (FDI) ownership mode choice of firms in Central and Eastern Europe (CEE) based on three most important theoretical paradigms of IB studies i.e. transaction cost economics, resource based view and institutional theory. The empirical analysis of 720 FDIs made by the firms from all four Nordic countries in CEE region during 1990-2007 revealed that the probability WOS formation was increased by the high RD while for FDIs made during 2000s, international experience and strength of market conforming values in the target country became significant determinants of ownership mode choice for Nordic FDIs.

Partial or Full Acquisition: Influences of Institutional Pressures on Acquisition Entry Strategy of Multinational Enterprises

Expertly written by leading scholars from a range of different starting points, this compendium presents a synthesis of recent work relating to institutionally-informed accounts from transitional and emerging markets, as well as from mature economies. It specifically focuses on the linkage between institutions and what goes on inside firms, and the relationship between setting, strategic choice and systemic outcomes.

International Joint Venture Performance: Impact of Performance Measures and Foreign Parent, Target Country and Investment Specific Variables on Performance

The past three decades have witnessed a growing theoretical and managerial interest in international joint ventures (IJVs). Of growing interest has especially been the analysis of IJV performance. The previous studies have indicated very varying results about IJV performance and determinants of IJV performance. Fourteen hypotheses of the impact of foreign parent, target country, and investment strategy specific variables on performance were developed and tested. In a central role in the study was also the question do the results depend on the measure of performance? As the measures of performance were selected: longevity, survival, and stability. The empirical part of the paper is based on over 720 IJVs made by Finnish firms. The most significant variables were the international experience and the degree of diversification of the Finnish firms, unit unrelatedness, and the individualism dimension of culture. The results indicated relatively much differences depending on measure of performance.

The Central and Eastern European brewing industry since 1990

Purpose – This article aims to analyse the strategies of international brewing companies in the Central and Eastern European (CEE) beer market and the development of national beer markets in the region since 1990.Design/methodology/approach – The research is explorative, based on a broad variety of secondary data sources and company interviews.Findings – The findings provide an insight into the approaches of foreign brewing companies operating in CEE markets. Despite some differences in the initial internationalisation motives, target market choice and market entry modes that reflected the strategic priorities of investing brewers, market‐seeking motives, strong brands, marketing intelligence, rapid aggressive internationalization and control over the operations have been the key success factors for Western brewers in CEE.Research limitations/implications – The secondary nature of the research information is a limitation for the validity of the study. Nevertheless, the triangulation of data sources using ...