Seasoned Sailors: Can MNEs Learn with Troubled Institutional Environments?

In the present study, we examine the manner in which firms' experiential learning in challenging institutional environments shapes their entry strategies in subsequent international acquisitions targeting comparable contexts. Specifically, our research delineates the nexus between the instituti...

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Bibliographic Details
Published in:BAR, Brazilian administration review Brazilian administration review, 2023-10, Vol.20 (4), p.1-15
Main Authors: Darolt, Gabriela Schneider, Falaster, Christian, Reinert, Venilton, Quadros, Cynthia Boos de, Zucco, Fabricia Durieux
Format: Article
Language:English
Subjects:
Acquisition
Companies
Corruption
cross-border acquisitions
Decision making
Discretionary power
Emerging markets
experience
Experiential learning
Foreign corporations
Host country
Hypotheses
institutional environment
institutional experience
Intangible assets
MANAGEMENT
Market entry
Moderation
Multinational corporations
Ownership
ownership choice
Seamen
Taxation
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Summary:In the present study, we examine the manner in which firms' experiential learning in challenging institutional environments shapes their entry strategies in subsequent international acquisitions targeting comparable contexts. Specifically, our research delineates the nexus between the institutional expertise firms garner from operations in countries characterized by deficient institutional frameworks and the level of ownership they subsequently elect in acquisitions within similarly constituted environments. Utilizing a dataset comprised of 3,577 cross-border acquisitions aimed at emerging markets, spanning the period from 2010 to 2019, we find that institutional experience serves as a moderating variable. This moderation influences the impact of corruption, economic freedom, and political stability on the proportion of ownership stakes acquired during the transaction. While firms are generally inclined to augment their ownership levels in acquisitions where the institutional environment is more favorable, our findings paradoxically reveal that institutional experience amplifes, rather than mitigates, the relationship between extant institutional conditions and the chosen level of ownership, contrary to our initial hypotheses.
ISSN:1807-7692
1807-7692
DOI:10.1590/1807-7692bar2023230115