Can strong home country institutions foster the internationalization of MNEs?

Date

2012

Authors

He, Xiaoming
Cui, Lin

Journal Title

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Volume Title

Publisher

Emerald Group Publishing Ltd

Abstract

Purpose: While many studies on institutional environment have primarily focused on the influence of the host country environment, limited insights have been offered on how the different dimensions of home institutions affect firm internationalization. This paper aims to fill this gap by investigating the effects of regulatory institutions at home. Design/methodology/approach: Using country governance quality to proxy quality of regulatory institutions, this study attempts to reveal how regulatory institutions at home facilitate a multinational enterprise's (MNE's) international expansion and why the influence differs in different country clusters. Using hierarchical linear modeling and cluster analysis, proposed hypotheses were tested with a three-year panel of 511 firms from 38 countries. Findings: The results provide substantial support for the authors' hypotheses that MNEs with high governance quality at home are more engaged in internationalization than those with low governance quality at home. Moreover, differences in institutional effect do exist between country clusters. Practical implications: This study provides evidence that while country differences exist, governance quality at home can facilitate MNEs' expansion into foreign markets. This finding will help managers of any MNEs to consider country-level factors and evaluate the governance quality at home before committing resources into foreign operations. Originality/value: Building on the institutional environment literature, this theory and results make original contributions by underscoring how the consideration of regulatory institutions at home can significantly improve understanding of institutional influence on MNEs. The findings have important implications for both international business researchers and managers of MNEs.

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Citation

Source

The Multinational Business Review

Type

Journal article

Book Title

Entity type

Access Statement

License Rights

DOI

10.1108/15253831211286264

Restricted until

2037-12-31