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Klaus E. Meyer

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Klaus E. Meyer

The process of change from a centrally planned system to a market economy generates an institutional framework that is only partially reformed, and therefore inconsistent and unstable. This leads to high transaction costs for economic agents. Multinational enterprises entering transition countries have to adapt their strategies to the local institutions and reduce exposure to highly imperfect markets. This paper analyzes how the costs of organizing business in transition environments influence entry mode choice. The empirical results show that host country institutions in transition economies, have an impact on the choice of entry modes. Moreover, different mechanisms determine the internalization of managerial and technological knowledge.

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Klaus E. Meyer

Guided by the overarching question “how and why does the emerging economy context matter for business?”, this collection brings together key contributions of Klaus Meyer on multinational enterprises (MNEs) competing in, and originating from, emerging economies. The book also explores how outward investment strategies contribute to building internationally competitive MNEs.
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Klaus E. Meyer

Multinational enterprises (MNEs) invest in a variety of host economies, and closely interact with local businesses and society at large. This role has become the focus of policy debates of all sorts, as MNEs are seen as a primary conduit of globalization, thus spreading both its benefits and its negative side effects. This research review offers an interdisciplinary perspective on MNEs and host economies.
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Klaus E. Meyer

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Klaus E. Meyer

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Klaus E. Meyer

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Klaus E. Meyer and Yi Wang

Transaction cost economics (TCE) has been extensively applied by international business scholars to analyze joint ventures and strategic alliances. It provides a theoretical basis to analyze how firms organize their transactions with other firms, and hence their choices of governance structures, for example, between JVs and other organizational forms. However, TCE has also been frequently critiqued and empirical findings on some of the constructs derived from TCE find inconsistent results. This chapter critically evaluates the TCE literature on cross-border business activity to evaluate to what extent this empirical literature actually supports or refutes TCE-based arguments, and to provide directions for future research. We identify four major challenges: (1) the level of analysis used to proxy transaction costs, (2) contextual drivers of transaction costs, especially in emerging economies, (3) the theoretical ambiguity of TCE arguments with respect to distance and experience, and (4) the assumption that JVs are a flexible (low-risk) mode of operation. This discussion leads to suggestions on how to design empirical research more consistent with the theory.

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Danchi Tan and Klaus E. Meyer

Foreign investors access local knowledge by co-locating with other foreign direct investment (FDI) firms. However, different aspects of local knowledge can be obtained from different local businesses. Thus some foreign investors co-locate with FDI firms from the same country of origin, while others co-locate with foreign industry peers. We argue that, relative to industry FDI agglomeration, country-of-origin agglomeration provides an effective channel for the sharing of sensitive and tacit knowledge about local business environments. Therefore foreign investors in need of such local knowledge are more likely to locate in country-of-origin agglomerations. Empirical evidence based on FDI in Vietnam indicates that foreign investors who perceive local institutions as particularly weak, and those with a high degree of outsidership in the local environment, are more likely to seek country-of-origin agglomerations than industry FDI agglomerations.

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Klaus E. Meyer and Yi Wang

Transaction cost economics (TCE) is probably the most frequently used theoretical foundation for studies of joint ventures (JVs) and strategic alliances (see reviews by Tsang, 2000; Zhao et al., 2004; Tihanyi et al., 2005; Geyskens et al., 2006; Brouthers and Hennart, 2007; Brouthers, 2013). Transaction cost economics addresses the question how firms organize their transactions with other firms, and, consequently, where they draw their organizational boundaries. Transaction cost economics provides a theoretical grounding to analyze the choice of governance structures, for example between JVs and other organizational forms, such as licensing, contracts or wholly owned subsidiaries (WOS). However, despite its parsimony and its popularity, TCE has also been frequently critiqued and is arguably the most misinterpreted theory in international business research (Borys and Jemison, 1989; Zajac and Olsen, 1993; Ghoshal and Moran, 1996). Moreover, empirical findings on some of the constructs derived from TCE find inconsistent results. While many studies support the arguments of TCE, other studies find insignificant or even opposite results (Zhao et al., 2004; Brouthers and Hennart, 2007).