Abstract
This study examines how MNEs align resource commitment with environmental conditions (challenges and opportunities) when they invest in a foreign emerging market. MNEs often face a dilemma in allocating resources to this environment: without this commitment, they cannot build a strong competitive foothold; yet with over-commitment, there is excessive economic exposure. Our analysis of MNEs in a major emerging market suggests that resource commitment is an inverse function of market uncertainty and this inverse link is stronger for less strategically proactive MNEs. Resource commitment is also an increasing function of market opportunities and this function is stronger for firms emphasizing demand-side (as opposed to cost-side) gains. In addition, in a highly volatile industry, resource commitment is negatively associated with cultural distance, but in a relatively stable industry, it is positively associated with cultural distance. And finally, as foreign subsidiaries become older, the influence of cultural distance on resource commitment is weakened.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 749-773 |
| Number of pages | 25 |
| Journal | Journal of Management Studies |
| Volume | 41 |
| Issue number | 5 |
| DOIs | |
| State | Published - Jul 2004 |
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ASJC Scopus subject areas
- Business and International Management
- Management of Technology and Innovation
- Strategy and Management
Cite this
Building a strong foothold in an emerging market : A link between resource commitment and environment conditions. / Luo, Yadong.
In: Journal of Management Studies, Vol. 41, No. 5, 07.2004, p. 749-773.Research output: Contribution to journal › Article
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TY - JOUR
T1 - Building a strong foothold in an emerging market
T2 - A link between resource commitment and environment conditions
AU - Luo, Yadong
PY - 2004/7
Y1 - 2004/7
N2 - This study examines how MNEs align resource commitment with environmental conditions (challenges and opportunities) when they invest in a foreign emerging market. MNEs often face a dilemma in allocating resources to this environment: without this commitment, they cannot build a strong competitive foothold; yet with over-commitment, there is excessive economic exposure. Our analysis of MNEs in a major emerging market suggests that resource commitment is an inverse function of market uncertainty and this inverse link is stronger for less strategically proactive MNEs. Resource commitment is also an increasing function of market opportunities and this function is stronger for firms emphasizing demand-side (as opposed to cost-side) gains. In addition, in a highly volatile industry, resource commitment is negatively associated with cultural distance, but in a relatively stable industry, it is positively associated with cultural distance. And finally, as foreign subsidiaries become older, the influence of cultural distance on resource commitment is weakened.
AB - This study examines how MNEs align resource commitment with environmental conditions (challenges and opportunities) when they invest in a foreign emerging market. MNEs often face a dilemma in allocating resources to this environment: without this commitment, they cannot build a strong competitive foothold; yet with over-commitment, there is excessive economic exposure. Our analysis of MNEs in a major emerging market suggests that resource commitment is an inverse function of market uncertainty and this inverse link is stronger for less strategically proactive MNEs. Resource commitment is also an increasing function of market opportunities and this function is stronger for firms emphasizing demand-side (as opposed to cost-side) gains. In addition, in a highly volatile industry, resource commitment is negatively associated with cultural distance, but in a relatively stable industry, it is positively associated with cultural distance. And finally, as foreign subsidiaries become older, the influence of cultural distance on resource commitment is weakened.
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UR - http://www.scopus.com/inward/citedby.url?scp=3142763282&partnerID=8YFLogxK
U2 - 10.1111/j.1467-6486.2004.00452.x
DO - 10.1111/j.1467-6486.2004.00452.x
M3 - Article
VL - 41
SP - 749
EP - 773
JO - Journal of Management Studies
JF - Journal of Management Studies
SN - 0022-2380
IS - 5
ER -