The Impact of Sub-National Institutions on Foreign Firms´ Market Entry

An Empirical Analysis of the Russian Regions

verfasst von: Maren Hagemeister

Verlag: Springer Fachmedien Wiesbaden

Buchreihe : BestMasters

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

Maren Hagemeister examines how institutions influence foreign firms´ market entry decisions and subsidiary performance in Russian regions. In an empirical study the author analyses the market entries of a sample of European Union firms in the Russian federal districts between 2005 and 2013. The thesis advances prior research with its sub-national perspective on institutions and the use of the thus far underutilized Business Environment and Enterprise Performance Survey (BEEPS) to derive regional data. The findings indicate that within-country differences can significantly affect foreign companies´ entry mode and success on a local market.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Research question, objective and structure

Abstract

Emerging markets are becoming increasingly attractive targets for foreign direct investment (FDI) (Bates & Buckles, 2017) and among the BRIC countries especially Russia bears interesting investment opportunities. Since the Russian economy only opened up for foreign investment after the breakup of the former Soviet Union (SU) in 1991, the economy is still very dynamic and foreign companies increasingly invest in the country (Schorsch, 2009). After FDI inflow into Russia had been still low in the 1990s, Russia ranked 8th among the world´s FDI recipients in the period from 2001 to 2011 (UNCTAD, 2018).

Maren Hagemeister

Chapter 2. State of research

Abstract

To develop a theoretical framework for analysing market entries of foreign firms in Russia, it is first necessary to review existing research in this field. The hypothesised interactions are primarily based on assumptions from institutional theory and its well documented relation to transaction cost economics, which makes those two economic theories particularly relevant. Institutional pressures in the host country can influence the level of transaction costs which firms have to incur for specific entry mode choices.

Maren Hagemeister

Chapter 3. Derivation of research hypotheses

Abstract

The body of prior entry mode research primarily consists of two streams of FDI literature, namely studies on establishment mode choice and research dealing with ownership mode choice. Most scholars analysed determinants or outcomes of foreign company entry modes based on the ownership structure prevalent in the new venture, hence differentiating between the choice of a wholly-owned subsidiary or a joint venture (Brouthers & Hennart, 2007). In the context of emerging economies, Karhunen and colleagues (2014) assess the impact of regionally adjusted institutional distance on the choice between wholly-owned subsidiaries and joint ventures in Russia, while Li and Sun (2017) focus on the impact of the sub-national institutional level in China on foreign firm performance.

Maren Hagemeister

Chapter 4. Methodology

Abstract

To check the validity of the proposed hypotheses, a quantitative analysis of market entries in the Russian market between 2005 and 2013 is chosen. The sample of market entries into Russia is extracted from databases provided by Bureau van Dijk, following the methodology used by prior entry mode studies (Bertrand, Betschinger, Bertschy, & Shidlauskas, 2016; Crabbé, Bruyne, & Merlevede, 2011; Gonchar & Marek, 2014; Holtbrügge & Berning, 2018; Kalkbrenner, 2010). Alternatively, recent empirical entry mode studies have drawn upon primary data gathered through surveys, which they addressed to employees or key informants of multinational companies (Dikova & van Witteloostuijn, 2007; Holtbrügge & Baron, 2013; Meyer, 2001; Puck et al., 2009).

Maren Hagemeister

Chapter 5. Findings

Abstract

In the following, I will elaborate on descriptive findings regarding the sample specifications of the parent and subsidiary firms involved in the market entries. Furthermore, I will describe findings with respect to institutional differences between the federal districts and institutional developments across the observed time period. Afterwards, the main results concerning the hypothesised interactions will be discussed.

Maren Hagemeister

Chapter 6. Discussion of the results

Abstract

After the description of general findings regarding the sample and subnational institutional specifications, along with a presentation the results of the analysis, the next section is dedicated to a closer discussion of the outcomes. First of all, possible causes for unsupported hypotheses are discussed. A special focus is put on the explanation of the cases, in which the institutional influence on entry mode choice is significant (H1-3), but the findings do not show an influence of the theoretically predicted mode on performance (H5-7).

Maren Hagemeister

Chapter 7. Contributions, limitations and implications

Abstract

Overall, this study offers several contributions to the existing body of entry mode literature. The thesis expands entry mode research based on institutional and transaction cost considerations in emerging economies, while the main contribution lies in the sub-national analysis of institutional factors. Additionally, the findings are of high practical relevance to foreign managers who consider entering Russia and who are interested in strategies to help their foreign operations perform better.

Maren Hagemeister

Backmatter

Titel: The Impact of Sub-National Institutions on Foreign Firms´ Market Entry
verfasst von: Maren Hagemeister
Verlag: Springer Fachmedien Wiesbaden
Electronic ISBN: 978-3-658-27827-4
Print ISBN: 978-3-658-27826-7
DOI: https://doi.org/10.1007/978-3-658-27827-4