Perceptions of institutional environment and entry mode : FDI from an emerging country

Demirbag, Mehmet and McGuinness, Martina and Altay, Huseyin (2010) Perceptions of institutional environment and entry mode : FDI from an emerging country. Management International Review, 50 (2). pp. 207-240. ISSN 0938-8249

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Abstract

Multinational companies from emerging and developing economies (EMNCs) are becoming major players in the globalized world economy and are likely to wield growing influence on economic dynamics in OECD, emerging, and developing countries alike. This paper presents data gathered from Turkish firms investing in the transitional economies of the Central Asian Republics. Using an integrated risk management framework (Miller 1992) as a platform for investigating executives' perceptions of environmental uncertainty in entry mode decisions, we extend the framework through the addition of variables, such as corruption, which synthesise institutional level factors. The findings indicate that greater ethical-societal uncertainties result in a preference for joint venture over wholly owned subsidiary. There is a strong correlation between the perceived risk of intervention and joint venture entry mode. We find only limited support for the Uppsala internationalisation model.