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英国论文代写-The Effect of National Culture on the Choice of Entry Mode

2017-06-06 | 来源:51due教员组 | 类别:更多范文

本篇英国论文代写- The Effect of National Culture on the Choice of Entry Mode讲了随着全球化趋势,外商直接投资发生频繁。通常,投资者对全球商业机会视而不见是无法承受的。资源优势,地域优势,投入成本低,市场繁荣旺盛,有利政策等优势条件下的地方优势吸引外商投资市场。本篇英国论文代写由51due英国论文代写机构整理,供大家参考阅读。


Introduction

With the trend of globalization, foreign direct investment takes place more frequently. Normally it is unaffordable for investors to turn a blind eye to global business opportunities (Leung & Gibson, 2005). Local advantages such as resource superiority, geographical advantage and low input costs, highly potential market prosperity, beneficial policies and other favorable conditions all attract foreign investors for a market entry. Basically, in selection of entry mode, options can be generally categorized into three levels which are respectively export mode, contract mode and equity mode, with controlling increasing one by one.

The article I will analyze is an essay published on Journal of International Business Studies by Bruce Kogut and Harbir Singh named The Effect of National Culture on the Choice of Entry Mode (Kogut & Singh, 1988). The article focuses on the equity mode which is further categorized into acquisition, wholly owned greenfield and joint venture, and validates the correlation between national cultures and selection among these three modes when considering a new market entry. The article provides good insights, yet it does have some pitfalls and weakness in logic and rigor. Therefore I will both identify the good insights and point out the weakness to be paid attention to in future studies.

Theme of the article

The article raises two hypotheses regarding impacts on market entry mode selection from cultural distance and attitudes towards uncertainty avoidance. The article refers to previous theories and arguments for preliminary assumptions and formation of hypotheses as mentioned above, which are further tested by regression and coefficients to validate the correlation. The article proposes that cultural distance impacts the choice of entry mode in foreign direct investment, and the more distant or different two cultures are from each other, the bigger probability that a foreign investor would like to choose joint venture.

A pitfall here I have detected is that, there is a lack of clear distinguishing between the independent variables in these two hypotheses. Cultural distance represents uncertainty to some extent, as the article explains that the uncertainty refers to the uncertainty over the management of foreign operations. There is a lack of straight forward borderline between these two arguments. If the author designs these two variables to be correlated logically on purpose, then the testing on these two hypotheses could have overlapping as these two assumptions are explaining one thing to some extent.

Research approach

Terminology explanation

The article explains that acquisition, greenfield and joint venture can sometimes exist simultaneously. There is overlapping among these three modes. The difference between acquisition and greenfield lies in the object asset’s existence before the market entry, while the sole ownership and joint venture are differentiated from each other in the degree of shareholding and centralization of control. To simplify the case, the article assumes greenfield to be wholly owned while shared ownership is categorized into joint venture.

On one hand, the simplification is to make the research more straight forward. However, on the other hand, the simplification is somewhat far away from the reality. In real business world, greenfield project is usually highly risky, and normally investors will find a partner to do the project together. Thus the stock arrangement could probably be joint venture rather than sole ownership in a certain greenfield project. Another point is that, when the article proposes the specific mode under a given circumstance, it always binds greenfield and joint venture together, which means that these two are actually not contradictory, while they are opposed to the selection of acquisition. It also reflects the weakness caused by unclearly defining and distinguishing the entry modes from each other, yet a better practice is that the variables in each hypothesis should be totally different from the others.

Literature review

Before the article sets up the model and runs it, the article conducts a literature review reflecting how previous scholars view the correlation between entry mode and various factors including firm specific level such as diversification of investment, experience, asset size, degree of multination, the specific sector operating in and other independent variables. The literature review lays a good foundation, since it not only provides insights and helps formation of assumptions, but also triggers further thoughts if the testing result is not consistent with some of them.

Supporting evidence

The article provides two tables illustrating the distribution of entry mode selection in different countries and different sectors. These data are sourced from official release so they are convincing in telling the preference as a fact. However, the weakness is that the perspective of parameter selection is not quite relevant to the research topic.

Modeling 

The basic formula is that, the choice of entry mode is determined by a combination of three variables, which are cultural characteristics, firm variables and industry variables. The article performs regression and comes up with coefficients to illustrate if the correlation between entry mode selection and each independent variable is strong or weak.

Applicability of the conclusion

Generally, the conclusion provides meaningful insights for both academic research and business practice. However, the applicability is somewhat limited, since the entry mode selection is a highly complicated decision making process in international business management. Investor have to think of numerous factors including many other factors not mentioned by the research such as the control rights, government policies, financing arrangements, riskiness of the project, legal considerations, possible return and so forth. 

Benefits to the practice

Even if there is limitedness regarding the conclusion’s applicability to real business management, I still believe a full consideration of the factors mentioned by the article can greatly help make wiser decisions in international market entry. Culture plays a key role in cross border partnership of various types. Acculturation stress will negatively impact the partnership (Lee, Kim & Park, 2015). To reduce the negative impacts, firstly both parties have to set up mutual awareness of cultural references (Olajide, 2014). This is the foundation for further efforts in setting up proper communication channels acceptable to both parties, establishing relevant management mechanisms and so forth as to handling the cultural conflicts.

References

Kogut, B., & Singh, H. (1988). The effect of national culture on the choice of entry mode. Journal of International Business Studies, 19(3), 411-432.

Leung, K., & Gibson, C. B. (2005). Culture and international business: recent advances and their implications for future research. Journal of International Business Studies, 36(4), 357-378.

Lee, S. J., Kim, J., & Park, B. I. (2015). Culture clashes in cross-border mergers and acquisitions: a case study of sweden's volvo and south korea's samsung ☆. International Business Review, 24(4), 580-593.

Olajide, F. S. (2014). Cultural awareness, a form of risk management in international business: case study of china. Business & Economic Research, 4.


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