Foreign Entry Mode and Performance: The Moderating Effects of Environment*

International alliance structure and effectiveness: evidence from law firms

International alliances are important strategic vehicles to build geographic scope and enter foreign markets, especially for firms lacking the resources or facing limitations to direct foreign expansion. Addressing recent calls to study alliance structure, we investigate the design parameters of nonequity international alliances and their performance implications. Building on the resource-based view of the firm, we theorize the effect of three key structural dimensions – formalization, interface, and specialization – on firm effectiveness. Our empirical work focusses on the legal service industry where international interfirm alliances are common, and resources like expert workers and knowledge are essential. We study 121 French, German, Italian, and Spanish law firms; and our data include the structural features of the alliances to which they belong, as well as various measures of firm effectiveness. Our analyses via structural equation modelling point toward the importance of informality and strong interface for effectiveness in these contexts. This study contributes to a finer understanding of international alliances by directly addressing the structural variation among nonequity international alliances, and analyzes their implications for firms. We thus respond to calls to investigate structural dimensions of alliances, operationalizing relevant dimensions of alliance organizational structure. Second, we add to understanding of the performance effects of international alliances, showing the benefits of individual structural parameters for firm effectiveness. Finally, we extend research on the use of international alliances as a strategic vehicle to enter foreign markets, capturing essential aspects of the internal arrangements of these interorganizational collaborative relationships, and thus adding to understanding of this strategic entry mode.

What Is Going on with the Research into the Internationalization of Small and Medium-Sized Enterprises (SMEs)? An Intellectual Structure Analysis into the State-of-the-Art (1990–2018)

The internationalization of Small and Medium-sized Enterprises (SMEs) is a topic of constant research interest due to the impact these have on economic growth and employment in developed, emerging and developing countries. A desire to understand and a growing interest in the study of the internationalization process of SMEs has provoked a significant increase in the production of manuscripts in this field in the last decade. Therefore, it is necessary to carry out periodic reviews on the state-of-the-art of this phenomenon in order to highlight advances and limitations, to motivate reflections and stimulate progress in future research. Thus, the main objective of this study is to describe the state-of-the-art of the research into SME Internationalization based on a bibliometric analysis of 1152 manuscripts published from 1990 to 2018. The results enable the identification of the main agents that are constantly developing this field through an analysis of scientific production and collaboration indicators. Furthermore, through a co-word analysis, this research establishes hot-spot research trends that need to be developed in future research. The main contribution of this research is the configuration of a knowledge map on SME Internationalization research.

Livestock diversification prospects for climate change adaptation in Dangila district, Ethiopia

Climate change is expected to increase weather variability and incidences of extreme events, which will have an impact on livelihoods and wellbeing. This study was intended to assess the role of livestock diversification in minimizing climate change adverse impacts on livelihood assets in Dangila district, Ethiopia. A random sampling technique was used, and 107 sample households were selected. Primary data were collected through field visit and interview, whereas secondary data were collected from the district agricultural office and meteorological stations. To analyze the data, descriptive statistics, correlation and multiple linear regressions were used for testing the hypotheses. Accordingly, the results revealed that weather shocks affected livelihood assets negatively and significantly (β = - .157, p < 0.05) than other shocks. There has been a significant positive interaction effect (β = .197, p < 0.05) between adaptive capacity and weather shock which implies that a household's adaptive capacity (through livestock diversification) counteracts the adverse effects of weather shocks on livelihood assets. Cattle population size has decreased by 19.8% from 2008 to 2017, which infers that reductions in rainfall amount and variation drive the downward trend in cattle number. To conclude, the efforts, which were achieved in terms of sustainable adaptation practices that enhance the resilience of household's livelihood assets, were not adequate. Therefore, to further enhance households' adaptive capacity, improvement in livestock diversification through the provision of a package of livestock species and access to credit for youths were recommended.

Success through Trust, Control, and Learning? Contrasting the Drivers of SME Performance between Different Modes of Foreign Market Entry

Globalization and international competition have driven a large number of small- and medium-sized enterprises (SMEs) to enter foreign markets. However, current knowledge on which factors determine SMEs’ foreign market performance and secure their success is limited. Using empirical data on 280 German SMEs’ activities in Arab markets, we contrast the performance effect of trust with those of control and learning (three of the most prominently studied success factors) across three different structural modes of market entry: non-equity entry, cooperative entry, and wholly-owned subsidiaries. Our results reveal marked differences between the three entry modes and we offer a detailed discussion of the underlying structural and cultural reasons. Consequently, this study allows for a comprehensive understanding of the determinants of SMEs’ foreign market performance and provides relevant advice as to which managerial approach to emphasize for which mode of foreign market entry.

Environment, Resource Integration, and New Ventures’ Competitive Advantage in China

Chinese new ventures have two principal approaches to resource integration: the stabilizing approach, which makes minor changes to a firm's current resource bundles, or the pioneering approach, which creates new capabilities. Two characteristics of Chinese entrepreneurial environment are distinct: environmental dynamism (uncertain markets, unstable institutions and the rapid technology upgrading) and munificence (the degree of competitive intensity and resource abundance). This study suggests that environmental dynamism and environmental munificence moderate the relationships between resource integration approaches and competitive advantage. Results based on a study of 410 Chinese new ventures show that both stabilizing and pioneering approaches to resource integration positively influence new ventures’ competitive advantage under the condition of low environmental dynamism and either high or low environmental munificence. However, neither stabilizing nor pioneering approaches have a significant effect on new ventures’ competitive advantage under the condition of low environmental munificence and high environmental dynamism. Only the pioneering approach has a positive effect on new ventures’ competitive advantage under the condition of high environmental munificence and high environmental dynamism.

Entry mode decisions

Purpose

– The purpose of this paper is to examine whether political elements affect entry mode decisions of foreign small- to medium-sized manufacturing enterprises (SMMEs) into post-communist Russia.

Design/methodology/approach

– The paper employs a qualitative research technique. The data were collected using confidential, semi-structured face-to-face interviews.

Findings

– Smaller manufacturers are more sensitive to the political environment. More specifically, during face-to-face interview, corruption and ineffective law enforcement were found to be the factors of significant concern to SMMEs in Russia.

Research limitations/implications

– The research on sensitive topics has limitations largely due to possible political implications for firms operating in Russia.

Practical implications

– This study on Russia is significant particularly for foreign small and medium enterprises, it will also raise concerns for firms entry modes into emerging markets of former USSR members.

Originality/value

– The paper presents findings that are based on primary sources – interviews with foreign firms currently conducting business in Russia. The research findings will be a valuable source of information to contemporary firms conducting feasibility studies with a view to doing business in Russia. In addition, this study contributes to the limited body of research knowledge on the business environment in Russia and the emerging markets of former USSR members.

O efeito do grau de internacionalização nas competências internacionais e no desempenho financeiro da PME brasileira

O objetivo deste artigo é identificar a relação entre o Grau de internacionalização (GRI), o desempenho financeiro e o desenvolvimento de competências internacionais das Pequenas e Médias Empresas (PMEs) brasileiras. O aumento do GRI, mediado pelo desenvolvimento das habilidades em lidar com o mercado internacional (Knight & Kim, 2009), assegura competências internacionais que podem distinguir as PMEs com alto GRI das PMEs que operam localmente (Penrose, 1959; Teece, Pisano, & Shuen, 1997). Por meio de uma survey aplicada em 114 empresas de até 200 funcionários (Ministério do Desenvolvimento da Indústria e do Comércio Exterior [MDIC], 2010), esta pesquisa testou a hipótese que o aumento do GRI desenvolve competências internacionais e melhora o desempenho financeiro. Devido à utilização de construtos de natureza complexa, a existência de erros e a necessidade de se identificarem múltiplas relações simultaneamente, a modelagem de equações estruturais (SEM) foi utilizada como técnica estatística. Os resultados indicam que, com o aumento do grau de internacionalização, a PME desenvolve competências internacionais e, assim, apresenta um desempenho superior. A relação de mediação do desenvolvimento de novas competências entre o aumento do GRI e o desempenho financeiro organizacional explora uma nova abordagem nos negócios internacionais, principalmente para as PMEs.