BNZ Asia Chair

International business

The interactions of institutions on foreign market entry mode

Ang SH, Benischke M, Doh J. Strategic Management Journal (Forthcoming)

This paper examines the interaction effects of institutional differences in the cognitive, normative, and regulatory domains on cross-border acquisition and alliance formation. Using a sample of 673 cross-border acquisitions and alliances conducted by multinational corporations (MNCs) from the manufacturing sector of six emerging economies (EEs) over the period 1995–2008, we find significant mimicking (cognitive domain) of local firms’ choice of ownership modes by EE firms. We also find that regulatory distance (regulatory domain) moderates the mimicking of both foreign and local firms while normative distance does not have any moderating effect. These findings contribute to our understanding of how EE MNCs mimic ownership modes in foreign market entry and how the interaction of this mimetic tendency with other institutional pillars affects these decisions.

Institutional explanations of cross-border alliance modes: The case of emerging economies firms

Ang SH, Michailova S. 2008, Management International Review, 48(5): 551-576.

Using a sample of 628 cross-border alliances established by emerging economies firms across 25 manufacturing and service industries in 64 host countries in the period 1995-2004, we investigate the effect of institutional factors on the adoption of equity alliance mode. The findings of this study contribute to empirical research in institutional theory, institutional explanations of cross-border alliances and strategic behavior of emerging economies firms. We find support for institutional explanations of the adoption of equity alliance mode by emerging economies firms. We aso find that institutional effects are contingent on the alliance location. When emerging economies firms establish alliances in developed host countries, their governance choice is most influenced by the normative pillar, followed by the cognitive pillar, with the regulatory pillar having a negligible effect. When the host countries are emerging economies, the regulatory pillar has the strongest influence followed by the cognitive pillar, with the normative pillar having an insignificant effect.

Emerging economies firms’ expansion in the European Union: Acquisitions versus alliances

Ang SH, Michailova S. 2007, European Journal of International Management, 1(4): 315-328.

We examine how regulatory and normative institutional factors influence the choice of acquisitions vs. alliances by Brazil, Russia, India and China (BRIC) firms in the European Union (EU). Using a sample of 228 acquisitions and 48 alliances established by BRIC firms in the EU in the period 2001–2005, we find regulatory but not normative effect on the choice of acquisitions vs. alliances. Specifically, we find that BRIC firms are more likely to acquire rather than ally when the target host country has a more restrictive regulatory environment. We do not find any cultural distance impact on this choice. Various implications are discussed.

International diversification: A ‘quick fix’ for performance?

Ang SH. 2007, University of Auckland Business Review, 9(1): 17-23.

The remoteness and relative size of New Zealand and Australia’s domestic markets often compound performance pressures, making it imperative even for larger and more established companies to diversify internationally. Using a sample of 152 listed companies in New Zealand and Australia, this study finds that those companies that have diversified beyond the Australasia region to a larger extent have actually performed better than those that diversify mainly regionally and those that do not diversify. In addition, the analysis also shows that prior performance of a company is a key determinant of international diversification efforts, except in the case of regional international diversification. That is, poor performance constrains a company’s ability to diversify internationally, except to neighbouring countries. These findings challenge the practices of using international diversification as a ‘quick fix’ for companies facing performance pressures and the effectiveness of diversifying into regional markets on the presumption of cultural and geographical proximity.

Country-of-origin effect of VC investment in biotechnology companies

Ang SH. 2006, Journal of Commercial Biotechnology, 13(1): 12-19.

Biotechnology companies can access financial and management resources through venture capitalist (VC) firms. An analysis of 1,490 VC investments shows that country-of-origin (CO) of biotech companies has an effect on the participation by VCs in various biotech subsectors. Specifically, it is found that US biotech companies tend to have higher amount received per VC firm, greater number of VC firms investing in them and greater biotech investment experience of the investing VC fi rms. Asia-Pacific biotech companies have consistently less VC firms investing in them and these investing VC firms tend to have less biotech investment experience. VC firms with greater biotech investment experience are also investing in European biotech companies more than those from the Americas less US. CO also correlates with outcomes in the four of the six key biotech subsectors studied. These findings suggest a strong CO effect of VC investment in biotech companies.