Klaus E. Meyer
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.
Klaus E. Meyer
Klaus E. Meyer and Ornjira Thaijongrak
The rapid emergence of multinational enterprises (MNEs) from emerging economies calls for a re-assessment of established theories of the MNE. We assess the usefulness of the internationalization process model (IPM), also known as the Uppsala model, to explain the recent strategies of emerging economy MNEs. We argue that popular stages models derived from the IPM are not helpful, but the underlying process of experiential learning driving steps of increased commitment is an important element in explaining the evolution of these MNEs over time. Focusing on the role of acquisitions within internationalization processes, we illustrate our arguments with six case studies of Thai MNEs. On this basis, we discuss how the IPM can inform future research on emerging economy MNEs. Specifically, the IPM suggests focusing on the internal and external factors that may induce firms to accelerate their cycle of international learning and commitment, in particular the roles of networks, acquisitions, human resources, big step commitments, the home country institutional environment, and possible managerial biases.
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.
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).