Foreign Investment Strategies and Sub-national Institutions in Emerging Markets: Evidence from Vietnam*

By K. Meyer, H. V. Nguyen. 2005

777 citations recorded by the source corpus.

Foreign investors entering emerging markets have to take strategic decisions on where and how to set up operations. These decisions have to accommodate institutional conditions that vary not only between countries, but also within the host economy. We offer a theoretical framework to analyse how institutions in an emerging economy influence entry strategy decisions. On this basis, we analyse the determinants of two key aspects of entry strategy: location and entry mode in Vietnam. We find that sub-national institutional variables have a significant influence on both dimensions. The availability of scarce resources affects the location of FDI and the likelihood of Greenfield entry. Institutional pressures arising from incumbent state-owned firms and the domestic market orientation of the investor lead to a preference for joint venture entry. Copyright Blackwell Publishing Ltd 2005.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/30cc6c76c82901e5f2d1cbb2ec8521491117ccf1

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Citations in the corpus

Institutional open access at home and outward internationalization (2015, neutral): “…a small number of studies (Atsmon, Kertesz, & Vittal, 2011), the emphasis has been on how domestic firms survive or exit (Chang & Xu, 2008; Lebedev & Peng, 2014), how foreign firms enter (Meyer & Nguyen, 2005; Shi et al., 2012, 2014b), and how foreign firms’ affiliates perform (Chan et al., 2010).”
International business research and risky investments, an analysis of FDI in conflict zones (2013, background): “In 2005 a newly formed company received a good deal of hostile press in both Europe and the US for announcing that it intended to explore the gas and oil reserves in Sudan.”
The determinants of Chinese outward foreign direct investment (2007, background): “There is an emerging body of theoretical work that concerns the institution-based view of strategy, or institutional theory for short (North, 1990; Peng, 2002; Meyer and Nguyen, 2005; Wright et al., 2005).”
Political connections and corporate diversification in emerging economies: Evidence from China (2012, background): “The responsibility for regional economic development in emerging economies has been transferred gradually from the central government to the local governments (Chan et al., 2010; Meyer & Nguyen, 2005 ).”
Boundaries of the Firm: Insights From International Entry Mode Research (2007, background): “…home country influences its entry mode, it makes sense to keep host country effects constant by looking at MNEs from multiple home countries investing in a single host country (Chen & Hu, 2002; Hennart & Larimo, 1998; Kogut & Singh, 1988; Luo, 2001; Meyer & Nguyen, 2005; Tatoglu & Glaister, 1998).”
The Moderating Impact of Informal Institutional Distance and Formal Institutional Risk on SME Entry Mode Choice (2011, neutral): “However, countries may vary internally to a large extent, which may point out a clear limitation for the application of GLOBE indices (Meyer and Nguyen, 2005).”
Exploring the relationship between institutional factors and FDI attractiveness: A meta-analytic review (2018, background): “Market supporting institutions are similarly beneficial because they allow efficiency-seeking investors to realize cost-saving benefits of internalizing production (Meyer & Nguyen, 2005) and protect intellectual property from being appropriated (Khoury & Peng, 2011).”
MNE institutional advantage: How subunits shape, transpose and evade host country institutions (2014, background): “…conditions, as well as the institutional distance between home and host country, affect the competitive strategies of MNEs (Boubakri, Mansi, & Saffar, 2013; Chung & Beamish, 2005; Henisz & Delios, 2001; Kostova, 1997; Kostova & Roth, 2002; Lu, 2002; Meyer & Nguyen, 2005; Xu & Shenkar, 2002).”
Firm Growth and Corruption: Empirical Evidence from Vietnam (2017, background): “As a result, many studies have documented that the provincial government, more than the central government, is the relevant level of government when thinking about the institutional climate facing firms, including the degree of bribe extraction (Meyer and Nguyen, 2005; Tran, Grafton, and Kompas, 200”
Extending Dunning's Investment Development Path: The role of home country institutional determinants in explaining outward foreign direct investment (2013, methodology): “…we put forward a novel conceptual framework, extending Dunning’s Investment Development Path (IDP) (Dunning, 1981, 1986, 1988) by incorporating institutional variables, drawing on institutional theory (Meyer & Nguyen, 2005; North, 1990; Peng, 2002; Wright, Filatotchev, Hoskisson, & Peng, 2005).”
Globalfocusing: From Domestic Conglomerates to Global Specialists* (2006, neutral): “…related strategic management issues, namely diversification strategies (Khanna and Palepu 2001; Kogut et al., 2002; Nachum, 2004), corporate restructuring (Newman, 2000; Uhlenbruck et al., 2003) and foreign direct investment strategies (Meyer 2001; Delios and Henisz, 2003; Meyer and Nguyen, 2005).”
Contextualizing Experience Effects in International Business: A Study of Ownership Strategies (2009, neutral): “In particular transition economies, such as China and Vietnam (Makino & Beamish, 1998; Meyer & Nguyen, 2005), have only gradually removed constraints on the level of foreign equity stakes.”
Domestic alliance network to attract foreign partners: Evidence from international joint ventures in China (2014, background): “…to understand local rules of thumb, regulation, and possibly create value by bridging institutional distance (Tracey & Phillips, 2011) or even institutional contradictions (Bjerregaard & Lauring, 2012) within a single emerging economy (Chabowski, Hult, Kiyak, & Mena, 2010; Meyer & Nguyen, 2005).”