Research has offered that one of the key advantages of multinational enterprises (MNEs) is the ability to learn from a diverse collection of environments. However the internationalization process model literature linking organizational experience to foreign subsidiary ownership structure has emphasized the role of related or market-specific experience, without fully considering the role of experience across a heterogeneous collection of markets. The current study seeks to bridge this gap and improve our understanding of the generalizability and influencing factors of the internationalization process model by considering how prior focal-market experience and heterogeneity in host-market experience across an MNE’s operations influence subsequent decisions on foreign subsidiary ownership structures. In the empirical context of Japanese automotive firms, the results suggest that when MNEs (a) have greater levels of experience in a focal host country or (b) have experienced a greater variety of regulatory differences across their multinational operations, they are more likely to pursue majority-owned structures in the face of less transparent regulatory environments. Our results also suggest that MNEs with greater levels of both focal host-country experience and variance in environments experienced across their operations, have less confidence in their experience in a focal host country, and are even less likely to pursue majority-ownership structures in the face of less transparent regulatory environments.
All Science Journal Classification (ASJC) codes
- Strategy and Management