30 years of research on entry mode and performance relationship: A meta-analytical review.
| Verfasser | Zhao, Hongxin |
| Posten | RESEARCH ARTICLE - Report - Abstract |
Abstract Almost 30 years after Anderson and Gatignon systematically conceptualized various entry modes, the scholarly research on their performance effects has accumulated a large amount of empirical evidence. However, research has progressed in a somewhat fragmented manner where the cumulative impact of entry modes is difficult to discern and the entry-performance relationship still remains a conundrum in IB research. This study consolidates and meta-analyzes the empirical findings reported from 44 independent studies. While the results show an overall significant effect of entry modes on performance, more fine-tuned meta-analyses unravel that the effects of entry modes vary with the performance types and a number of plausible contingencies. Findings are discussed in terms of implications for future research and limitations.
Keywords Entry mode [??] Performance [??] Meta-analysis [??] Contingencies
1 Introduction
Entry mode refers to the forms of operations that firms employ to enter into foreign markets (Hill et al. 1990; Brouthers and Hennart 2007) and it has been one of the most important strategic decisions of multinational enterprises (MNEs). However, which entry mode leads to superior performance? For almost 30 years since Anderson and Gatignon (1986)'s landmark work that conceptually categorizes firms' foreign market entry modes, this question has attracted a great attention of international business (IB) scholars. Yet, this fundamentally important inquiry still remains as a conundrum in international business research (Martin 2013). Despite the fact that a variety of explanations for why the choice of entry modes affect performance has been offered, the extant research evidence has progressed in a manner where its cumulative impact is difficult to discern. Some studies have suggested that entry modes with complete or high equity ownerships that confers great control by MNEs lead to good performance (e.g., Li et al. 2009). However, other researchers have argued exactly the opposite and suggest that entries through joint ownership allow foreign entrants to access local knowledge benefits MNEs (e.g., Lu and Beamish 2006) and ensure the mutual forbearance necessary for a stable relationship (e.g., Steensma and Lyles 2000).
Theoretically, a number of interesting questions have not been fully addressed. These include, but are not limited to: does entry mode truly matter in determining the performance? Does it matter if a subsidiary is wholly-owned or jointly owned? Are the incongruent findings contingent on other conditions? Thus, the proliferation of the E--P studies documenting the mixed findings presents a need for a more comprehensive and rigorous assessment of the existing literature in order to offer an overview of this stream of literature and provide insights into the power of different theoretical perspectives.
This article attempts to achieve three objectives. First, we comprehensively summarize the underlying reasoning with the supporting theories and weave together the accumulated empirical evidence to divulge patterns of entry and performance relationships in order to take stock of what we know. Second, entry mode researchers have taken three approaches to examine the relationship between entry mode and performance. One group of scholars looks at the direct relationship between entry modes and firm performance. Another group examines the choice of entry mode and firm survival. More recently, researchers have used a strategic fit approach and looked at the alignment of entry mode with mode experience. We use these three research approaches to determine which approach provides consistently significant results to help us understand better the relationship between entry mode choice and performance. Third, looking ahead, we explore the plausible contingency explanations for the next wave of research on entry mode. Specifically, we examine whether firms' specific and contextual factors might influence the relationship between mode-choice and performance.
We believe that such a meta-analytic synthesis is timely and important for three reasons. First, given the fact that the documented evidence remains inconclusive with divergent and conflicting findings, there is a need to ascertain if entry modes matter in performance, and specifically, which entry mode(s) performs superiorly. Second, while a number of studies has excellently reviewed the studies on the antecedents to entry mode choice (Tihanyi et al. 2005; Zhao et al. 2004), up to date, there is no such systematic review on the consequences of entry modes, given a large number of empirical studies on this topic being undertaken. Thus, taking stock of the manner in which entry modes and performance are conceptually and empirically investigated is a critical next step in the progression of entry strategy research. Third, unlike a traditional literature review, which is intractable and does not consider and correct for sampling errors, meta-analytic approach enables researchers to examine a more broad set of factors and provide a powerful tool for quantitatively synthesizing empirical research over a variety of studies (Hunter and Schmidt 2004). Particularly in situations where there are large numbers of studies with mixed and inconsistent findings, meta-analytic approach can play an important role in providing comprehensive and rigorous assessments of evidence with data that are closer to definitive conclusions than those reported in any single study (Miller and Cardinal 1994).
This study is organized as follows: we begin with an overall review of the reasoning and the supporting theories, and the descriptive summary of the aggregated empirical findings reported in the existing studies. In the following section we provide a quantitative assessment of the existing findings. Then, we explore the entry-performance contingencies in the next section. The last section concludes with a discussion of key findings of our meta-analytic review and suggestions for future research.
2 E--P Relationship: An Overview
In this section, first, we use the classification of entry modes developed by Anderson and Gatignon (1986) to provide a summary review of extant studies' logic and the related theoretical lenses in reasoning entry-performance relationships (Table 1). Second, we summarize the empirical findings of the study sample (Table 2) to highlight where entry-performance research stands.
2.1 Review of Major Theories Underlying E--P Relationship
There has been a diverse set of theories applied in guiding the empirical examinations of the performance effects of entry modes. We organized the key reasoning and the underlying theories along the entry modes to provide an overarching view.
Table 1 summarizes the reasoning in the hypotheses development and the underlying theories that connect the various entry modes and performance. As shown in Table 1, typically the existing studies developed the E--P reasoning by drawing on one or combined theories of transaction cost economics (TCE), resource-based view, Dunning's eclectic view, institutional theories, and organizational learning theory.
Table 1 reveals two noteworthy points. First, it appears that the directions of the predicted E--P relationships are fairly consistent among TCE-based reasoning. The studies that used TCE arguments in developing E--P relationships generally poised that better performance of MNEs' foreign affiliates associates with the high control mode of entries including merger and acquisitions (M&As), greenfield investment, wholly-owned subsidiaries (WOS), and majority joint ventures (majority JVs). The primary reasoning for the positive effects of high-control modes rests on the cost minimization and control arguments rooted in TCE (Williamson 1991). Following this key tenet of TCE, studies contend that majority or wholly-owned equity positions provide a parent firm with a greater degree of control over the systems, methods, and decisions of its subsidiary so that MNEs are less reluctant in transferring their firm-specific resources and intangible resources to gain better performance (Gaur and Lu 2007; Lee and Beamish 1995; Chang et al. 2013). WOS can also benefit the entrants since the costs of preventing relational hazards in JVs can exceed the benefits of reducing environmental uncertainty through local partner (Dikova 2009). Additionally, high ownership-based entries give foreign entrants high degrees of control to avoid various frictions at operational level, thus achieving better performance (Boyd et al. 2012; Quer and Claver 2008; Deng 2001; Chen 1999; Merchant 2002; Murray et al. 2012). This TCE-based reasoning is also echoed in the studies using Dunning's eclectic framework, arguing that the combinations of ownership, location and internalization take into account of a broad set of costs/risk in providing the optimal performance outcome (e.g., Woodcock et al. 1994; Brouthers et al. 1999).
Second, while studies drawing on agency theory and ownership-location-internalization (OLI) paradigm with consistent predictions, there are many variations in predicting E--P relationships employing more diverse theoretical lenses in examining joint ventures with distinctions of majority and minority equity (JVs), equal JVs and the levels of foreign ownership as entry strategies. Some even proposed contradicting arguments. For instance, studies applying the RBV view argued that WOS or higher levels of foreign ownership motivate parent firms to commit more resources such as advanced technology to support their subsidiaries, thus leading to higher IJV productivity and performance (Anand and Delios 1997; Luo 2003; Luo and Zhao 2004; Li et al. 2009). Also drawing on RBV views, however, other studies argued that JVs can outperform WOS since JVs enjoy relatively easy access to resources such as cheaper labor, materials, and the government policy (Luo 1997). JVs with local partner through whom...
Um weiterzulesen
FORDERN SIE IHR PROBEABO ANCOPYRIGHT GALE, Cengage Learning. All rights reserved.
