Mimetic Entry and Bandwagon Effect: The Rise and Decline of International Equity Joint Venture in China

Strategic Management Journal, Vol. 29, No. 2, pp. 195-217, 2008

23 Pages Posted: 16 Feb 2010

See all articles by Jun Xia

Jun Xia

Montclair State University - School of Business

Justin Tan

York University - Schulich School of Business

David Tan

University of Washington

Date Written: 2008

Abstract

The rise and decline of foreign entry strategies in transition economies is an important yet largely overlooked issue in the literature. This study is a step toward filling this gap by examining how mimetic entry within reference groups and the emergence of a competing strategy affect the bandwagon phenomenon of a dominant strategy in the context of China, where international equity joint ventures (EJVs) used to be a dominant entry strategy among foreign firms in the 1990s. Findings from a sample of 1,123 EJVs formed in China’s non-restricted industries from 1990 to 2003 show that the impact of home and host-country industry effects are not symmetric between the EJV rise and decline periods. Cross-border merger and acquisition (M&A) as a competing strategy has an important impact during the EJV decline period but not the rise period. The interactive effects between EJV and M&A strategies occur only in the host-country industries. We discuss such results and offer suggestions for future research.

Keywords: mimetic entry, bandwagon effect, entry mode

Suggested Citation

Xia, Jun and Tan, Justin and Tan, David, Mimetic Entry and Bandwagon Effect: The Rise and Decline of International Equity Joint Venture in China (2008). Strategic Management Journal, Vol. 29, No. 2, pp. 195-217, 2008, Available at SSRN: https://ssrn.com/abstract=1552101 or http://dx.doi.org/10.2139/ssrn.1552101

Jun Xia (Contact Author)

Montclair State University - School of Business ( email )

Upper Montclair, NJ 07043
United States

Justin Tan

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

HOME PAGE: http://www.schulich.yorku.ca/SSB-Extra/Faculty.nsf/faculty/Tan%20Justin

David Tan

University of Washington ( email )

Box 353226
Seattle, WA 98195-3200
United States

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