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Establishment mode choice by Chinese firms in Latin America: The role of host country‐specific experience and government official visits
Author(s) -
Quer Diego,
Rienda Laura,
Andreu Rosario
Publication year - 2019
Publication title -
thunderbird international business review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.553
H-Index - 37
eISSN - 1520-6874
pISSN - 1096-4762
DOI - 10.1002/tie.22092
Subject(s) - multinational corporation , subsidiary , latin americans , emerging markets , government (linguistics) , business , host (biology) , marketing , finance , political science , philosophy , law , biology , ecology , linguistics
This study addresses establishment mode decisions by emerging‐market multinational enterprises entering other emerging economies. More precisely, we examine the influence of prior host country experience and home government official visits on the choice between the acquisition of a local company and the creation of a new subsidiary from scratch. By analyzing 315 investments carried out by Chinese firms in Latin America, we obtain that they are more likely to enter through an acquisition when they have established prior subsidiaries in the host country. Moreover, recent Chinese government official visits contribute to mitigate the difficulties of an acquisition for those companies with less local experience.