Foreign entry, cultural barriers, and learning

Article Abstract:

A study is conducted to assess the success of the globalization efforts of companies by focusing on the longevity of foreign entries. It is hypothesized that the longevity of foreign ventures is affected by the cultural distance between the company's home and host country; by its ownership structure, that is, whether it is wholly owned or a joint venture; by its mode, or whether foreign entry is made via a start-up or an acquisition; and by previous foreign expansion experiences. It is also hypothesized that learning effects within countries are strong while those from blocks near the company's home country are weak. These hypotheses are tested using data on Dutch companies that have been operating globally since 1966. Findings show that cultural distance is a major variable in foreign entry and that prior experience in the host country contributes to the longevity of acquisitions.

Foreign operations, Netherlands, Corporations, Learning, Corporations, Dutch

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Foreign entry and survival: effects of strategic choices on performance in international markets

Article Abstract:

The strategies that can effectively minimize the probability of failure in international business expansion are examined. The study applies a hazard rate model on data obtained from a sample of foreign companies in the US computer and pharmaceutical industries over the 1974-89 period to investigate how corporate performance in international markets is affected by diversification strategies, entry strategies, and organizational learning and experience. Findings indicate that foreign acquisitions and joint ventures are more likely to fail than subsidiaries built through greenfield investments. The failure rate is also found to be higher for subsidiaries that diversify than for those that stick with their parent's companies' core businesses. The results further reveal that companies learn important lessons from their experiences in doing business in other countries.

Foreign corporations, Business failures

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Mode of entry and ex-post performance

Article Abstract:

A study formulated and empirically examined hypotheses that describe how a group of industry-level and firm-level variables are differentially linked to post-entry performance of two types of industry entrants. One type diversifies by internally developing a new business while the other does so by acquiring an already existing business in the new industry. In this study, structural entry barriers were conceptualized as sunk costs or irrevocable investments made by entrants to become competitive compared to incumbent firms in the industry. Findings revealed that preentry firm, industry and relatedness factors are differently linked to postentry performance of de novo and acquisitive entrants, with performance variance attributed to these factors ranging between 17% and 37%.

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