Uncover the heterogeneity of EMNE's institutional difficulty perception and its behavioral orientation – evidence of Chinese MNEs' FDI in Taiwan
International Journal of Emerging Markets
ISSN: 1746-8809
Article publication date: 21 September 2023
Abstract
Purpose
The existing research on institutional distance implicitly posits the monotonic effect of contextual differences on the multinational enterprise (MNE) behaviors (e.g. entry mode, research and development (R&D) investment and subsidiary reverse knowledge transfer). Namely, MNEs from the same home to the same host countries are thought to have homogenous perceptions on the institutional influences and thus behave similarly. However, the authors argue that MNEs, due to their different performance aspirations in host countries, will have heterogenous perceptions on such contextual influences and thereafter behave differently.
Design/methodology/approach
Drawing on the behavioral theory of the firm and employing a unique sample comprised of 140 Chinese MNEs' foreign direct investments (FDIs) in Taiwan in 2017, the authors developed and tested the hypotheses.
Findings
The authors found that the emerging-market MNEs' (EMNEs’) perceptions of higher local institutional difficulties will be strengthened when their local performances are below their aspiration levels, making them more risk-taking. Nevertheless, EMNEs' local experiences and local equity-based partnerships will mitigate such negative perceptions, mitigating their risk-taking orientation.
Originality/value
The empirical findings make contributes to the international business (IB) literature by extending knowledge on the determinants and conditions of the heterogeneity in EMNEs' behavioral orientations when in face of the same institutional distance. The authors also provide managerial implications by showing that EMNEs' firm-specific resources (i.e. local experience and local equity-based partnership) will alter their perceptions of local institutional difficulties, leading to different behavioral orientations.
Keywords
Acknowledgements
The authors would like to thank the Taiwan National Science and Technology Council for their support (Project Numbers: MOST 110-2410-H-011 -022 and NSTC111-2410-H-008-020). The authors also appreciate the insights from Editor-in-Chief Ilan Alon and Senior Editor Diego Quer, as well as the reviews from three anonymous referees, which have significantly improved the quality of this research. Any remaining errors are the responsibility of the authors.
Citation
Yeh, C.-P., Hsiao, Y.-C. and Gebhadt, S. (2023), "Uncover the heterogeneity of EMNE's institutional difficulty perception and its behavioral orientation – evidence of Chinese MNEs' FDI in Taiwan", International Journal of Emerging Markets, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJOEM-04-2021-0513
Publisher
:Emerald Publishing Limited
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