International Expansion Through Sequential Investment: The Effects of National Culture on Buyouts and Dissolutions in Biotechnology Partnerships

33 Pages Posted: 12 May 1997

See all articles by Timothy B. Folta

Timothy B. Folta

Purdue University - Krannert School of Management

Walter J. Ferrier

University of Kentucky

Date Written: December 18, 1996

Abstract

This study examines the role of national culture on an issue which is central to competitive strategy: whether to maintain flexibility or commit to a strategic direction. We consider that equity investments in foreign partners may be initiated as the first step in a sequential acquisition process. Applying a competing hazard model to a sample of 168 joint ventures and minority equity collaborations in the biotechnology industry, we find that cultural characteristics have some bearing on a firm's willingness to commit through partner acquisition or partnership dissolution, and its preference for flexibility embodied in maintaining an equity collaboration.

JEL Classification: G31, G32, G34

Suggested Citation

Folta, Timothy B. and Ferrier, Walter J., International Expansion Through Sequential Investment: The Effects of National Culture on Buyouts and Dissolutions in Biotechnology Partnerships (December 18, 1996). Available at SSRN: https://ssrn.com/abstract=43561 or http://dx.doi.org/10.2139/ssrn.43561

Timothy B. Folta (Contact Author)

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States
765-494-9252 (Phone)

Walter J. Ferrier

University of Kentucky ( email )

College of Business & Economics
Lexington, KY 40506-0034
United States

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