IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v64y2011i7p714-722.html
   My bibliography  Save this article

A comparative analysis of the role of national culture on foreign market acquisitions by U.S. firms and firms from emerging countries

Author

Listed:
  • Malhotra, Shavin
  • Sivakumar, K.
  • Zhu, PengCheng

Abstract

Do firms from emerging economies differ from U.S. firms in their foreign market acquisition strategies? A comparison of cross-border acquisitions by firms from the United States and 18 emerging countries shows that (1) firms from both the United States and emerging countries target countries that are culturally closer to their home countries, (2) a strong interaction effect occurs between market potential and cultural distance for emerging country firms as the market potential increases (i.e., at high market potential, firms from emerging economies are willing to overlook cultural distance), (3) no interaction effect occurs between market potential and cultural distance for U.S. firms, and (4) different cultural dimensions affect the market entry strategies of U.S. firms and firms from emerging countries.

Suggested Citation

  • Malhotra, Shavin & Sivakumar, K. & Zhu, PengCheng, 2011. "A comparative analysis of the role of national culture on foreign market acquisitions by U.S. firms and firms from emerging countries," Journal of Business Research, Elsevier, vol. 64(7), pages 714-722, July.
    • Handle: RePEc:eee:jbrese:v:64:y:2011:i:7:p:714-722
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148-2963(10)00154-2
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Erin Anderson & Hubert Gatignon, 1986. "Modes of Foreign Entry: A Transaction Cost Analysis and Propositions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 17(3), pages 1-26, September.
    2. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    3. Ahmed, Zafar U. & Mohamad, Osman & Tan, Brian & Johnson, James P., 2002. "International risk perceptions and mode of entry: a case study of Malaysian multinational firms," Journal of Business Research, Elsevier, vol. 55(10), pages 805-813, October.
    4. Arjen H L Slangen & Jean-François Hennart, 2008. "Do multinationals really prefer to enter culturally distant countries through greenfields rather than through acquisitions? The role of parent experience and subsidiary autonomy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(3), pages 472-490, April.
    5. Franke, George R. & Nadler, S. Scott, 2008. "Culture, economic development, and national ethical attitudes," Journal of Business Research, Elsevier, vol. 61(3), pages 254-264, March.
    6. Bruce A. Blonigen, 2019. "Firm-Specific Assets and the Link Between Exchange Rates and Foreign Direct Investment," World Scientific Book Chapters, in: Foreign Direct Investment, chapter 3, pages 89-120, World Scientific Publishing Co. Pte. Ltd..
    7. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2007. "Governance Matters VI: Aggregate and Individual Governance Indicators, 1996-2006," Policy Research Working Paper Series 4280, The World Bank.
    8. Lau, Ho-Fuk, 2003. "Industry evolution and internationalization processes of firms from a newly industrialized economy," Journal of Business Research, Elsevier, vol. 56(10), pages 847-852, October.
    9. Robertson, Kim R. & Wood, Van R., 2001. "The relative importance of types of information in the foreign market selection process," International Business Review, Elsevier, vol. 10(3), pages 363-379, June.
    10. Jan Johanson & Jan-Erik Vahlne, 1977. "The Internationalization Process of the Firm—A Model of Knowledge Development and Increasing Foreign Market Commitments," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 8(1), pages 23-32, March.
    11. Seung‐Hyun Lee & Oded Shenkar & Jiatao Li, 2008. "Cultural distance, investment flow, and control in cross‐border cooperation," Strategic Management Journal, Wiley Blackwell, vol. 29(10), pages 1117-1125, October.
    12. Gatignon, Hubert & Anderson, Erin, 1988. "The Multinational Corporation's Degree of Control over Foreign Subsidiaries: An Empirical Test of a Transaction Cost Explanation," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(2), pages 305-336, Fall.
    13. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 411-432, September.
    14. Vern Terpstra & Chwo-Ming Yu, 1988. "Determinants of Foreign Investment of U.S. Advertising Agencies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(1), pages 33-46, March.
    15. Shang-Jin Wei, 2000. "Local Corruption and Global Capital Flows," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(2), pages 303-354.
    16. Laszlo Tihanyi & David A Griffith & Craig J Russell, 2005. "The effect of cultural distance on entry mode choice, international diversification, and MNE performance: a meta-analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(3), pages 270-283, May.
    17. Shawna O'Grady & Henry W Lane, 1996. "The Psychic Distance Paradox," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(2), pages 309-333, June.
    18. William H Davidson, 1980. "The Location of Foreign Direct Investment Activity: Country Characteristics and Experience Effects," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 11(2), pages 9-22, June.
    19. Hongxin Zhao & Yadong Luo & Taewon Suh, 2004. "Transaction cost determinants and ownership-based entry mode choice: a meta-analytical review," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(6), pages 524-544, November.
    20. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2006. "Governance matters V: aggregate and individual governance indicators for 1996 - 2005," Policy Research Working Paper Series 4012, The World Bank.
    21. Hau, Le Nguyen & Evangelista, Felicitas, 2007. "Acquiring tacit and explicit marketing knowledge from foreign partners in IJVs," Journal of Business Research, Elsevier, vol. 60(11), pages 1152-1165, November.
    22. John H Dunning, 1998. "Location and the Multinational Enterprise: A Neglected Factor?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(1), pages 45-66, March.
    23. Ronald Fischer & Angela Mansell, 2009. "Commitment across cultures: A meta-analytical approach," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(8), pages 1339-1358, October.
    24. Papadopoulos, N. & Chen, Hongbin & Thomas, D. R., 2002. "Toward a tradeoff model for international market selection," International Business Review, Elsevier, vol. 11(2), pages 165-192, April.
    25. Susan P Douglas & C Samuel Craig, 1983. "Examining Performance of U.S. Multinationals in Foreign Markets," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 14(3), pages 51-62, September.
    26. Paul D Ellis, 2008. "Does psychic distance moderate the market size–entry sequence relationship?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(3), pages 351-369, April.
    27. Davidson, William H., 1983. "Market similarity and market selection: Implications for international marketing strategy," Journal of Business Research, Elsevier, vol. 11(4), pages 439-456, December.
    28. Jiatao Li & Stephen Guisinger, 1992. "The Globalization of Service Multinationals in the “Triad” Regions: Japan, Western Europe and North America," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 23(4), pages 675-696, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chenxi Zhou & Jinhong Xie & Qi Wang, 2016. "Failure to Complete Cross-Border M&As: “To” vs. “From” Emerging Markets," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 47(9), pages 1077-1105, December.
    2. Conti, Claudio Ramos & Parente, Ronaldo & de Vasconcelos, Flávio C., 2016. "When distance does not matter: Implications for Latin American multinationals," Journal of Business Research, Elsevier, vol. 69(6), pages 1980-1992.
    3. Paul Eliccel, 2016. "Culture and Accumulation of Capital : An Empirical study in the Context Haitian Society [Culture et accumulation du capital : une étude empirique dans le contexte social haïtien]," Working Papers hal-01555285, HAL.
    4. Moschieri, Caterina & Campa, José Manuel, 2014. "New trends in mergers and acquisitions: Idiosyncrasies of the European market," Journal of Business Research, Elsevier, vol. 67(7), pages 1478-1485.
    5. Lebedev, Sergey & Peng, Mike W. & Xie, En & Stevens, Charles E., 2015. "Mergers and acquisitions in and out of emerging economies," Journal of World Business, Elsevier, vol. 50(4), pages 651-662.
    6. Dowling, Michael & Vanwalleghem, Dieter, 2018. "Gulf Cooperation Council cross-border M&A: Institutional determinants of target nation selection," Research in International Business and Finance, Elsevier, vol. 46(C), pages 471-489.
    7. Vissa, Siva Kameswari & Thenmozhi, M., 2022. "Do home country stability factors matter for domestic and cross border mergers and acquisitions? A case of G19 countries," Finance Research Letters, Elsevier, vol. 47(PA).
    8. Eliccel Paul, 2017. "Culture et accumulation du capital : une étude empirique dans le contexte social haïtien," Working Papers hal-01567104, HAL.
    9. Wang, Zhe & Jiang, Dianchun & Zhang, Ming, 2024. "Seeking new location advantages: Analysis of emerging digital cross-border M&As—Based on TIMG index," International Business Review, Elsevier, vol. 33(2).
    10. Ameni Hamdouni, 2024. "Government Effectiveness, Institutional Distance, and Equity Ownership in Cross-Border Acquisitions by Emerging Economies: A Comparative Analysis," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(3), pages 339-360, March.
    11. Zagudalova, E. & Grigorieva, S. & Zueva, S., 2024. "Does the education and experience of CEO matter? Evidence from M and As initiated by the Russian companies," Journal of the New Economic Association, New Economic Association, vol. 64(3), pages 103-127.
    12. Venkateswaran, Ramya Tarakad & George, Rejie, 2020. "When does culture matter? A multilevel study on the role of situational moderators," Journal of Business Research, Elsevier, vol. 116(C), pages 99-122.
    13. Tsai Chi Kuo & Jessica Hanafi & Wan Chen Sun & Rex Aurelius C. Robielos, 2016. "The Effects of National Cultural Traits on BOP Consumer Behavior," Sustainability, MDPI, vol. 8(3), pages 1-20, March.
    14. Reddy, K.S. & Xie, En & Huang, Yuanyuan, 2016. "Cross-border acquisitions by state-owned and private enterprises: A perspective from emerging economies," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1147-1170.
    15. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    16. Reddy, Kotapati Srinivasa, 2015. "Macroeconomic Change, and Cross-border Mergers and Acquisitions: The Indian Experience, 1991-2010," MPRA Paper 63562, University Library of Munich, Germany, revised 2015.
    17. Lavezzolo, Sebastián & Rodríguez-Lluesma, Carlos & Elvira, Marta M., 2018. "National culture and financial systems: The conditioning role of political context," Journal of Business Research, Elsevier, vol. 85(C), pages 60-72.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Drogendijk, H.J., 2001. "Expansion patterns of Dutch firms in Central and Eastern Europe : Learning to internationalize," Other publications TiSEM 18571cef-0dd0-46ff-82aa-3, Tilburg University, School of Economics and Management.
    2. Mehmet Demirbag & Martina McGuinness & Hüseyin Altay, 2010. "Perceptions of Institutional Environment and Entry Mode," Management International Review, Springer, vol. 50(2), pages 207-240, April.
    3. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    4. Malhotra, Shavin & Sivakumar, K. & Zhu, PengCheng, 2011. "Curvilinear relationship between cultural distance and equity participation: An empirical analysis of cross-border acquisitions," Journal of International Management, Elsevier, vol. 17(4), pages 316-332.
    5. Zdolsek, Daniel & Kolar, Iztok, 2013. "Management disclosure practices for disaggregated (financial) information in Slovenian unlisted companies," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 18(2), pages 232-263.
    6. Cristina López-Duarte & Marta M. Vidal-Suárez & Belén González-Díaz & Nuno Rosa Reis, 2016. "Understanding the relevance of national culture in international business research: a quantitative analysis," Scientometrics, Springer;Akadémiai Kiadó, vol. 108(3), pages 1553-1590, September.
    7. Powell, K. Skylar & Lim, Eunah, 2017. "Investment motive as a moderator of cultural-distance and relative knowledge relationships with foreign subsidiary ownership structure," Journal of Business Research, Elsevier, vol. 70(C), pages 255-262.
    8. Bell, J.H.J., 1996. "Joint or Single Venturing? : An Electric Approach to Foreign Entry Mode Choice," Other publications TiSEM 06f84735-3cf5-432f-8bc8-c, Tilburg University, School of Economics and Management.
    9. Larimo, Jorma & Arslan, Ahmad, 2013. "Determinants of foreign direct investment ownership mode choice: Evidence from Nordic investments in Central and Eastern Europe," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 18(2), pages 232-263.
    10. Huanglin Wang & Jean-Louis Schaan, 2008. "How much distance do we need? Revisiting the “National cultural distance paradox”," Management International Review, Springer, vol. 48(3), pages 263-278, May.
    11. Daniel R Clark & Dan Li & Dean A Shepherd, 2018. "Country familiarity in the initial stage of foreign market selection," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(4), pages 442-472, May.
    12. Lim, Jongha & Makhija, Anil K. & Shenkar, Oded, 2016. "The asymmetric relationship between national cultural distance and target premiums in cross-border M&A," Journal of Corporate Finance, Elsevier, vol. 41(C), pages 542-571.
    13. Wrona, Thomas & Trąpczyński, Piotr, 2012. "Re-explaining international entry modes – Interaction and moderating effects on entry modes of pharmaceutical companies into transition economies," European Management Journal, Elsevier, vol. 30(4), pages 295-315.
    14. Jonas Puck & Markus K. Hödl & Igor Filatotchev & Hans-Georg Wolff & Benjamin Bader, 2016. "Ownership mode, cultural distance, and the extent of parent firms’ strategic control over subsidiaries in the PRC," Asia Pacific Journal of Management, Springer, vol. 33(4), pages 1075-1105, December.
    15. Malhotra, Shavin & Lin, Xiaohua & Farrell, Carlyle, 2016. "Cross-national uncertainty and level of control in cross-border acquisitions: A comparison of Latin American and U.S. multinationals," Journal of Business Research, Elsevier, vol. 69(6), pages 1993-2004.
    16. Diego Useche & Ernest Miguelez & Francesco Lissoni, 2020. "Highly skilled and well connected: Migrant inventors in cross-border M&As," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(5), pages 737-763, July.
    17. James, Barclay E. & Sawant, Rajeev J. & Bendickson, Joshua S., 2020. "Emerging market multinationals’ firm-specific advantages, institutional distance, and foreign acquisition location choice," International Business Review, Elsevier, vol. 29(5).
    18. Dovev Lavie & Stewart R. Miller, 2008. "Alliance Portfolio Internationalization and Firm Performance," Organization Science, INFORMS, vol. 19(4), pages 623-646, August.
    19. López-Duarte, Cristina & Vidal-Suárez, Marta M., 2013. "Cultural distance and the choice between wholly owned subsidiaries and joint ventures," Journal of Business Research, Elsevier, vol. 66(11), pages 2252-2261.
    20. Magnani, Giovanna & Zucchella, Antonella & Floriani, Dinorá Eliete, 2018. "The logic behind foreign market selection: Objective distance dimensions vs. strategic objectives and psychic distance," International Business Review, Elsevier, vol. 27(1), pages 1-20.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:64:y:2011:i:7:p:714-722. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.