FOREIGN ENTRY, CULTURAL BARRIERS, AND LEARNING

FOREIGN ENTRY, CULTURAL BARRIERS, AND LEARNING This paper examines the longevity of foreign entries. Hypotheses are developed on the mode (start‐ups vs. acquisitions) and ownership structure (wholly owned vs. joint ventures) in relation to cultural distance. The hypotheses are tested within a framework of organizational learning, using data on 225 entries that 13 Dutch firms carried out from 1966 onwards. Results show that the presence of cultural barriers punctuates an organization's learning. Cultural distance is a prominent factor in foreign entry whenever this involves another firm, requiring the firm to engage in ‘double layered acculturation.’ We also identify locational ‘paths of learning.’ The longevity of acquisitions is positively influenced by prior entries of the firm in the same country. Similarly, the longevity of foreign entries, in which the firm has a majority stake, improves whenever the expanding firm engaged in prior entries in the same country and in other countries in the same cultural block. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Strategic Management Journal Wiley

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Publisher
Wiley
Copyright
Copyright © 1996 John Wiley & Sons, Ltd.
ISSN
0143-2095
eISSN
1097-0266
DOI
10.1002/(SICI)1097-0266(199602)17:2<151::AID-SMJ799>3.0.CO;2-Z
Publisher site
See Article on Publisher Site

Abstract

This paper examines the longevity of foreign entries. Hypotheses are developed on the mode (start‐ups vs. acquisitions) and ownership structure (wholly owned vs. joint ventures) in relation to cultural distance. The hypotheses are tested within a framework of organizational learning, using data on 225 entries that 13 Dutch firms carried out from 1966 onwards. Results show that the presence of cultural barriers punctuates an organization's learning. Cultural distance is a prominent factor in foreign entry whenever this involves another firm, requiring the firm to engage in ‘double layered acculturation.’ We also identify locational ‘paths of learning.’ The longevity of acquisitions is positively influenced by prior entries of the firm in the same country. Similarly, the longevity of foreign entries, in which the firm has a majority stake, improves whenever the expanding firm engaged in prior entries in the same country and in other countries in the same cultural block.

Journal

Strategic Management JournalWiley

Published: Feb 1, 1996

References

  • An eclectic theory of the choice of international entry mode
    Hill, Hill; Hwang, Hwang; Kim, Kim
  • The internationalization of the firm: Four Swedish cases
    Johanson, Johanson; Wiedersheim‐Paul, Wiedersheim‐Paul
  • Foreign entrant survival and foreign market share: Canadian companies' experience in United States medical sector markets
    Mitchell, Mitchell; Shaver, Shaver; Yeung, Yeung
  • The product cycle hypothesis in the new international environment
    Vernon, Vernon

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