Emerging economies and institutional quality: Assessing the differential effects of institutional distances on ownership strategy

Ru-Shiun Liou, Mike Chen-Ho Chao and Monica Yang

Journal of World Business, 2016, vol. 51, issue 4, 600-611

Abstract: The current study contributes to the institution-based view of internationalization that is contingent upon the home country development. We examine the differential effects of formal and informal institutions on emerging market multinational corporations’ (EMNCs) ownership strategies. Facing a large informal institutional distance that represents diverse cultural beliefs, EMNCs opt for a low ownership position that alleviates legitimacy threat, whereas a large formal institutional distance leads EMNCs to establish dominant ownership control. EMNC home market conditions, including market size and regulatory institutional quality, further explain the differential effects of institutional distances.

Keywords: Emerging market multinational corporations (EMNCs); Cross-border mergers and acquisitions (M&As); Institutional distance; Ownership strategy (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (49)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:worbus:v:51:y:2016:i:4:p:600-611

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DOI: 10.1016/j.jwb.2016.03.001

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