TY - JOUR
T1 - Interdependent behavior in foreign direct investment
T2 - The multi-level effects of prior entry and prior exit on foreign market entry
AU - Chan, Christine M.
AU - Makino, Shige
AU - Isobe, Takehiko
N1 - Funding Information:
This paper is based on a chapter of the first author’s dissertation, which was awarded Barry M. Richman Best Dissertation Award at the Academy of Management conference in 2003. The authors would like to thank our Departmental Editor, Professor Anand Swaminathan, and three anonymous reviewers for their constructive comments. We also thank the participants at the Academy of Management meeting for their valuable feedback on our study. We gratefully acknowledge the helpful suggestions and comments from the seminar participants at University of South Carolina, Baruch College, Georgia State University, International University of Japan, and City University of Hong Kong. A special thank goes to Professor W. Richard Scott for his continuous support and encouragement. This paper was supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region (Project No. HKU 7213/03H).
PY - 2006/9
Y1 - 2006/9
N2 - This paper examines the interdependent foreign market entry decisions of multinational corporations (MNCs). Based on the argument that legitimacy and competition are two important forces in foreign market entry decisions, we hypothesize that an MNC’s market entry decisions are influenced by its own prior entry and prior exit decisions and those of other MNCs. We examine this general proposition at four levels of analysis: the host country, global industry (an industry that spans host countries), local industry (an industry that is separately defined within each host country), and parent firm level. Our analysis of a panel data of over 4000 market entry decisions that were made by Japanese MNCs shows that an MNC’s market entry decision has a stronger inverted U-shaped relationship with the prior entry and exit decisions of other MNCs at the local industry level than the prior entry and exit decisions of other MNCs at the host country and global industry levels. We also find that both the prior entry and prior exit decisions of an MNC have a marginal influence on its own subsequent market entry decisions at the parent firm level.
AB - This paper examines the interdependent foreign market entry decisions of multinational corporations (MNCs). Based on the argument that legitimacy and competition are two important forces in foreign market entry decisions, we hypothesize that an MNC’s market entry decisions are influenced by its own prior entry and prior exit decisions and those of other MNCs. We examine this general proposition at four levels of analysis: the host country, global industry (an industry that spans host countries), local industry (an industry that is separately defined within each host country), and parent firm level. Our analysis of a panel data of over 4000 market entry decisions that were made by Japanese MNCs shows that an MNC’s market entry decision has a stronger inverted U-shaped relationship with the prior entry and exit decisions of other MNCs at the local industry level than the prior entry and exit decisions of other MNCs at the host country and global industry levels. We also find that both the prior entry and prior exit decisions of an MNC have a marginal influence on its own subsequent market entry decisions at the parent firm level.
KW - Interdependent behavior in foreign market entry
KW - Legitimacy and competition in external and internal environments
KW - Multi-level analysis
KW - Prior entry and prior exit decisions as a signal to potential entrants
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U2 - 10.1057/palgrave.jibs.8400216
DO - 10.1057/palgrave.jibs.8400216
M3 - Article
AN - SCOPUS:84984723618
SN - 0047-2506
VL - 37
SP - 687
EP - 698
JO - Journal of International Business Studies
JF - Journal of International Business Studies
IS - 5
ER -
