This paper analyzes the role language distance plays on the choice between greenfield investments and acquisitions when investing abroad. Based on transaction cost theory, the paper focuses on the impact of language distance on ex ante and ex post costs in international acquisition processes. In order to empirically test our predictions, a database of foreign direct investments made by listed Spanish firms was used. Empirical results point towards a tendency to avoid acquisitions as investment mode in international contexts characterized by high language distance.
AbstractThis article explores the connections between business activity and development aid that can help achieve the sustainable development goals placed by the United Nations (UN) in its development agenda. The article relies on an exhaustive review of the recent literature on development aid in the context of the European Community of West African States (ECOWAS). Connections exist between private firms' activity and both private and official aid, as firms can engage in business philanthropy, impact migrants' remittances, act as suppliers for bilateral or multilateral financially supported projects and participate in cross sector partnerships that involve agents from different societal sectors.
Purpose– The purpose of this paper is to study the influence of cultural positions on the choice of entry mode in foreign direct investment (FDI) – joint ventures vs wholly owned subsidiaries. The paper focusses on the impact of cultural positions along four cultural dimensions, as well as on the interactions between these positions and FDI's contextual variables (i.e. linguistic differences).Design/methodology/approach– A fuzzy set qualitative comparative analysis is performed on a data set of Spanish investments located in the European Union.Findings– Existence of interaction effects among cultural positions along different dimensions, as well as between cultural positions and FDI's contextual variables.Research limitations/implications– Main limitations relate to the data set, as only FDIS carried out by big corporations and coming from a single country are considered.Practical implications– Managers making decisions on the choice of entry mode must take into account the position relative to each individual cultural dimension, as well as its interaction with other cultural dimensions and FDI's contextual variables, rather than just considering cultural distances (CDs) between countries.Originality/value– First, focus on cultural positions (rather than CDs). It allows taking into account both the cultural characteristics of each party and their relative values along individual cultural dimensions. Second, development of a qualitative analysis that considers the contextual features of the investment.
AbstractThis article analysis how official development aid (ODA) flows impact the international growth opportunities and processes of private firms in donor and recipient countries. It explores the differentiated impact of bilateral and multilateral aid flows, as well as flows coming from the Development Assistance Committee (DAC) and non‐DAC donors. The study relies on a systematic literature review of the empirical articles published between 2005 and 2021 in internationally recognised academic journals. The review provides a comprehensive overview of the topic and identifies conclusive findings, existing gaps, avenues for future research and policy implications. Overall, the literature shows a positive impact of ODA flows on the international growth opportunities for firms in donor countries, whether derived from their direct engagement in aid‐financed projects or from non‐direct effects like the reputational capital and positive image accrued by donor countries in recipient ones. Conversely, empirical evidence relative to the impact on firms in recipient nations is mixed and points to the existence of factors that condition the impact of ODA flows, among them, the institutional strength in recipient countries and the formulas through which ODA flows are channelled.
