Language differences and entry modes: a quantitative study
Keywords
Loading...
Authors
Issue Date
2023-08-28
Language
en
Document type
Journal Title
Journal ISSN
Volume Title
Publisher
Title
ISSN
Volume
Issue
Startpage
Endpage
DOI
Abstract
The increasing foreign activity of businesses makes it necessary to evaluate the criteria hinder internationalization efforts. When evaluating foreign entry modes, there are several options to consider, ranging from acquisitions to joint ventures. To assess which entry mode is most optimal for each business, language and its differences must be considered. Differences in language between the home and the target country are believed to play a significant role in determining the distribution of transaction costs, which in turn determines entry mode efficiency. Given the lack of extensive academic literature on the topic, this thesis has empirically investigated the impact of language differences on the choice between joint venture and acquisition modes of foreign entry.
The statistical analysis was performed using a logistic regression for 106,790 entries distributed across most regions of the world. The results showed that, as the linguistic distance between two countries increases, a joint venture entry is preferred in order to fulfill the role of translator. Furthermore, the level of shared language negatively moderated this relationship. In summary, differences in language were found to have a clear impact on entry mode choices. The main limitation consist of the omission of greenfield entry mode from the study
Description
Citation
Supervisor
Faculty
Faculteit der Managementwetenschappen