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The effect of national culture on the choice of entry mode (1988)
| Venue: | Journal of International Business Studies |
| Citations: | 593 - 0 self |
BibTeX
@ARTICLE{Kogut88theeffect,
author = {Bruce Kogut and Harbir Singh},
title = {The effect of national culture on the choice of entry mode},
journal = {Journal of International Business Studies},
year = {1988},
pages = {19--411}
}
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Abstract
Abstract. Characteristics of national cultures have frequently been claimed to influence the selection of entry modes. This article investigates this claim by developing a theoretical argument for why culture should influence the choice of entry. Two hypotheses are derived which relate culture to entry mode choice, one focussing on the cultural distance between countries, the other on attitudes towards uncertainty avoidance. Using a multinomial logit model and controlling for other effects, the hypotheses are tested by analyzing data on 228 entries into the United States market by acquisition, wholly owned greenfield, and joint venture. Empirical support for the effect of national culture on entry choice is found. Foreign direct investment into the United States has grown dramatically since the early 1970s. Accompanying this increase has been a growth of academic work studying the phenomenon.1 Whereas impressive information concerning foreign direct investment in the United States in general is available, there has been surprisingly few statistical investigations concerning the choice of entry modes. The objective of this article is two-fold. First, original data regarding the choice of entry mode by foreign firms is described in terms of country and industry patterns. Second, the factors that influence the choice between joint ventures, wholly owned greenfield (i.e., start-up) investments, and acquisitions are analyzed statistically. In particular, the statistical investigation seeks to *Bruce Kogut is a Visiting Professor at the Institute of International Business at the Stockholm School of Economics and is on leave from the Wharton School. *"*Harbir Singh is an Associate Professor of Management at the Wharton School of Business. His prior research is on corporate acquisitions and on top management incentives, and has been published in the Academy of Management Jounal and the
Keyphrases
entry mode national culture foreign direct investment joint venture statistical investigation wharton school united state stockholm school corporate acquisition mode choice industry pattern cultural distance theoretical argument harbir singh original data united state market associate professor academic work relate culture top management incentive international business bruce kogut attitude towards uncertainty avoidance multinomial logit model management jounal empirical support prior research foreign firm entry choice whereas impressive information
