The impact of manager's animosity and ethnocentrism on multinational enterprise (MNE) international entry‐mode decision

• Author: Wootae Chun,Seung H. Kim,Mamoun Benmamoun,Morris Kalliny
• Date: 01 March 2019
• DOI: http://doi.org/10.1002/tie.22024
• Published date: 01 March 2019

INTERNATIONAL BUSINESS THEORY AND APPLICATION

The impact of manager’s animosity and ethnocentrism on

multinational enterprise (MNE) international entry-mode

decision

Mamoun Benmamoun

1

| Morris Kalliny

2

| Wootae Chun

3

| Seung H. Kim

4

1

Department of International Business, Boeing

Institute of International Business, Richard

A. Chaifetz School of Business, Saint Louis

University, St. Louis, Missouri

2

Rohrer College of Business, Department of

Marketing, Rowan University, Glassboro, New

Jersey

3

School of Business, University of Northern

British Columbia, Prince George, British

Columbia, Canada

4

Department of International Business Emeritus,

Boeing Institute of International Business,

Richard A. Chaifetz School of Business, Saint

Louis University, St. Louis, Missouri

Correspondence

Mamoun Benmamoun, Assistant Professor of

International Business, Boeing Institute of

International Business, Richard A. Chaifetz

School of Business, Saint Louis University,

Cook Hall, Suite 322, 3674 Lindell Blvd.,

St. Louis, MO 63108.

Email: benmamm@slu.edu

For MNEs, entry-mode decision is undeniably critical. While the literature has identified several

determinants of foreign entry-mode choice, few have examined the impact of manager's ani-

mosity and ethnocentrism. This article is an attempt to fill this gap by examining the indepen-

dent effect of manager animosity and ethnocentrism as well as the moderating effect of cultural

intelligence on entry mode. Data were collected through surveys targeting upper-level managers

in the U.S., U.K., and Germany to examine how animosity and ethnocentrism would shape their

decision to enter Iran, a host market largely perceived negatively in the West. Multivariate mul-

tiple regression was used to test the hypothesized effects and to capture the multidimensional

aspect of entry modes. We found that, in general, manager's animosity and ethnocentrism do

negatively affect the choice of an entry mode and that cultural intelligence has the potential to

neutralize that negative effect.

KEYWORDS

animosity, cultural intelligence, entry mode, ethnocentrism, joint venture, wholly owned

subsidiary

1|INTRODUCTION

Managers seeking entry to a target market must make a strategic

choice regarding four common modes of foreign market entry: export-

ing, licensing, joint venture (JV), and wholly owned subsidiary (WOS).

As national boundaries continue to disappear, more firms are seeking

opportunities abroad (Klein, Ettenson, & Morris, 1998). However, fail-

ing to choose the appropriate entry mode could undermine any

potential gain from entry and have far-reaching consequences on a

firm's global expansion strategy (Yip, 1980). The choice of entry mode

is indeed a strategic decision because each entry mode dictates

resource commitments at varying levels and influences firm perfor-

mance (Ahammad, Leone, Tarba, Glaister, & Arslan, 2017; Brouthers,

2013; Piaskowska & Trojanowski, 2014). How firms enter foreign

markets has been a topic of great interest in international business,

marketing, and management literature (Brouthers, 2013; Canabal &

White III, 2008; Cui and Stening, 2011; Duarte & García-Canal, 2004;

Holtbrügge & Baron, 2013; Kuo, Kao, Chang, & Chiu, 2012;

Morschett, Schramm-Klein, & Swoboda, 2010; Reid & Walsh, 2003;

Wrona & Trąpczy

nski, 2012; Zitta & Powers, 2003). Several factors

influencing entry-mode choices have been discussed in the literature.

Stopford and Wells (1972) and Piaskowska and Trojanowski (2014)

explain the firm's international experience and product diversification

play an important role in entry-mode selection and impact interna-

tional strategic decisions. Woodcock, Beamish, and Makino (1994)

looked at the influence of cultural and other national differences

between the host and home countries on entry-mode selection. Caves

and Mehra (1986) found entry-mode selection to be influenced by

several industries and firm-specific factors, such as firm size, advertis-

ing intensity, research intensity, industry growth, and industry concen-

tration. Other studies examined the impact of location, ownership,

and internationalization advantages (Agarwal & Ramaswami, 1992;

Kim & Hwang, 1992). Dunning (1980, 1988) proposed an eclectic par-

adigm and he posits that international production is determined by

three sets of advantages: (a) ownership-specific advantages;

(b) location advantages, and (c) internalization advantages.

While existing studies have identified several predictors of entry-

mode choices, a key factor that has not been adequately considered is

DOI: 10.1002/tie.22024

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