Title: Moderating effects of related experience and firm size: will multinationals opt for acquisitions in high informal institutional settings?

Authors: Zakari Abubakari; Min Wang; Iddrisu Abubakari

Addresses: Department of Management and Economics, University of Electronic Science and Technology of China, Sichuan, China ' Department of Management and Economics, University of Electronic Science and Technology of China, Sichuan, China ' Department of Mathematics, Dormaa Senior High School, Brong-Ahafo, Ghana

Abstract: This study examines the influence of informal institutional distance on the establishment mode strategies of foreign multinational enterprises (MNEs) in Ghana with the moderation role of experiential knowledge (related experience) and parent firm size. The empirical analysis is based on a sample of 223 green-field and acquisition market entries over the period 2001-2016, drawn from 20 countries. The study employs binomial logistic regression to establish the relationships among the variables, and the results reveal that high informal institutional distance leads to the preference for acquisitions over green-field investments. The study also finds that high level of experiential knowledge (related experience) and large parent firm size have positive relationship with acquisition establishment as compared to green-field investment. We therefore argue that strong related experience and large parent firm size strengthen the choice for acquisitions in relation to high informal institutional distance.

Keywords: institutions; institutional distance; informal institutional distance; institution-based view; related experience; establishment mode; acquisition; green-field investment; international management.

DOI: 10.1504/EJIM.2021.116702

European Journal of International Management, 2021 Vol.16 No.1, pp.85 - 117

Received: 07 Mar 2018
Accepted: 22 Aug 2018
Published online: 30 Jul 2021 *

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