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Foreign entry, cultural barriers, and learning

Barkema, Harry G., Bell, John H. J. and Pennings, Johannes M. (1996) Foreign entry, cultural barriers, and learning. Strategic Management Journal, 17 (2). pp. 151-166. ISSN 0143-2095

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Abstract

This paper examines the longevity of foreign entries. Hypotheses are developed on the mode (start-ups vs. acquisitions) and ownership structure (wholly owned vs. joint ventures) in relation to cultural distance. The hypotheses are tested within a framework of organizational learning, using data on 225 entries that 13 Dutch firms carried out from 1966 onwards. Results show that the presence of cultural barriers punctuates an organization's learning. Cultural distance is a prominent factor in foreign entry whenever this involves another firm, requiring the firm to engage in ‘double layered acculturation.’ We also identify locational ‘paths of learning.’ The longevity of acquisitions is positively influenced by prior entries of the firm in the same country. Similarly, the longevity of foreign entries, in which the firm has a majority stake, improves whenever the expanding firm engaged in prior entries in the same country and in other countries in the same cultural block.

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1002/%28...
Additional Information: © 1996 John Wiley and Sons
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HF Commerce
Journal of Economic Literature Classification System: F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business
G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration; Conglomerates; Subsidiaries
Sets: Departments > Management
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 06 Sep 2011 08:20
URL: http://eprints.lse.ac.uk/38118/

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