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Regional integration, multinational enterprise strategy and the impact of country-level risk: the case of the EMU

Hillemann, J., Verbeke, A. and Oh, W.-Y. (2019) Regional integration, multinational enterprise strategy and the impact of country-level risk: the case of the EMU. British Journal of Management. ISSN 1467-8551

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To link to this item DOI: 10.1111/1467-8551.12326

Abstract/Summary

The European Monetary Union (EMU) provides a new macro-level, institutional setting for multinational enterprises (MNEs). The authors investigate the impact of regional integration on MNE strategy by analysing Belgian firms’ entry-mode choices in foreign markets, both EMUand non-EMU ones, with a focus on what impact remains of countrylevel risk. They demonstrate that regional integration has altered the impact of countrylevel institutional risk on MNE entry-mode choices inside the EMU. The conventional predictions of international business theory have been reversed, with higher country-level risk inside the EMU driving a preference for wholly owned subsidiaries.Within the integrated region, insider firms now view higher country-level risk as the equivalent of higher, micro-level contracting risk. Such risk can best be mitigated through full internalization, combined with arm’s length contracts, rather than through equity joint ventures.

Item Type:Article
Refereed:Yes
Divisions:Henley Business School > International Business and Strategy
ID Code:80040
Publisher:Wiley

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