Economics at your fingertips  

MNE host-country alliance network position and post-entry establishment mode choice

Yue Zhao (), Ronaldo Parente (), Stav Fainshmidt () and Steven Carnovale ()
Additional contact information
Yue Zhao: University of Arkansas at Little Rock
Ronaldo Parente: Florida International University/FGV-Ebape
Stav Fainshmidt: Florida International University
Steven Carnovale: Rochester Institute of Technology

Journal of International Business Studies, 2021, vol. 52, issue 7, No 7, 1350-1364

Abstract: Abstract Prior international business research recognizes that networks can affect internationalization decisions, yet our understanding of how networks in the host country do so, especially with respect to establishment mode choices between greenfield and acquisition, remains nascent. Host-country networks become particularly salient after initial entry as the multinational enterprise (MNE) more directly engages with local actors and develops embeddedness in the host country. We draw from network theory to argue that establishment modes of post-entry foreign direct investments into a host country are shaped by the MNE’s position within local alliance networks. We posit that local network centrality increases the likelihood of choosing greenfield because it provides access to broad knowledge flows and higher social status that reduce the MNE’s need to pursue acquisitions of local firms. Conversely, local network brokerage increases opportunities for knowledge recombination, making greenfield a less likely choice vis-à-vis acquisition. Using data on automotive MNEs entering the U.S. over 22 years, we find support for our predictions. Demonstrating that distinct aspects of the MNE’s local network alliance position can operate in different ways to effectuate establishment mode choices, this study advances a more nuanced understanding of how networks shape internationalization into a host country.

Keywords: network centrality; network brokerage; host-country expansion; establishment mode (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

DOI: 10.1057/s41267-021-00414-5

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2021-10-02
Handle: RePEc:pal:jintbs:v:52:y:2021:i:7:d:10.1057_s41267-021-00414-5