Contextualizing Experience Effects in International Business: A Study of Ownership Strategies
37 Pages Posted: 10 Sep 2007
Date Written: September 2007
Experienced firms act differently than newcomers, yet such differences vary with the context and with the type of experience. We thus investigate the effects of international experience on MNEs' ownership strategy across a range of developed and developing economies. We distinguish competence building and partner selection effects of experience, which vary between general international experience and country-specific experience, and across host contexts. This contextualization of the theoretical arguments suggests that the predicted effects hold in some host countries, but not in others.
In support of these arguments, our empirical study of 1787 Taiwanese overseas subsidiaries finds that general international experience facilitates wholly owned operations in developed economies in North East Asia and Europe, while country-specific experience facilitates joint ownership in China.
Keywords: experience effects, ownership, joint venture, subsidiaries, international business, Taiwan, China, context
JEL Classification: D21, F23, L29, L63, M21
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