Journal Article

The Impact of Entry Mode Choice on Foreign Affiliate Performance: The Case of Foreign MNEs in South Korea

Kim, Youngok, Gray, Sidney J.

2008

Overview

This study examines the performance impacts of entry mode choice based on the perceptions of managers of a large sample of foreign MNEs in South Korea. Using an extended transaction costs model, an evaluation of performance relative to predicted entry mode is carried out. We find that affiliate performance is a multidimensional and complex phenomenon, which may be properly explained by multiple factors, including the coordination and control of the affiliate by the MNE, that go beyond initial entry mode choices. Foreign MNEs following the entry mode predicted by the extended transaction costs model showed poorer performance than non-followers in respect of non-financial performance. However, no significant differences were found for financial performance. The findings appear to reinforce a recent call to re-examine transaction costs theory and lend further support for incorporating additional potentially important determinants of affiliate performance.

• Publisher: Gabler Verlag,Springer Nature B.V
• Subject: Alliances / Analysis / Business and Management / Business performance management / Business Strategy/Leadership / Business structures / Business studies / Coordination / Corporate strategies / Costs / Economic theory / Emerging Markets/Globalization / Equity / Evaluation / Financial performance / Foreign enterprises / Foreign markets / Foreign operations / High technology industries / Host country / Hypotheses / Impact analysis / International business enterprises / International trade / Joint ventures / Korean culture / Logistic regression / Management / Management science / Market entry / Multinational corporations / Multinational enterprises / Multiple regression / Operations Management / Organization / Production management / South Korea / Statistical mode / Studies / Transaction costs