Entry mode and innovation adoption of multinational firms. The effect of cultural distance and home/host country development

Resumen

The aim of this study is to gain further understanding of those factors that explain how multinational enterprises (MNEs) internationalize and compete in foreign countries. In particular, we underscore the role of MNEs country of origin when examining the influence of cultural distance on entry mode decisions. Moreover, we argue that the entry mode choice will subsequently determine the way subsidiaries innovate. Based on arguments from transaction cost theory, our contention is that shared-owned subsidiaries will present lower adoption speed of innovations than fully-owned subsidiaries. Finally, the moderating role of the host country environment in reducing potential opportunism is considered. We test our hypothesis on the mobile telecommunication sector during the period 2000-2017. Based on information of 18 multinational groups that operate in the five continents, our findings mostly support our hypotheses.