Market-seeking autonomy due to their local embeddedness,Market-seeking autonomy due to their local embeddedness,

Market-seeking and resource-seeking
acquisitions are independent of their parent MNEs and thus require less
integration because they are embedded in
their local environment (Slangen and Beugelsdijk 2010). Market-seeking
subsidiaries are granted autonomy due to their local embeddedness, and thus
constitute fewer integration challenges
for MNEs. However, this strong embeddedness in the local environment is likely
to give rise to consumer ethnocentrism (Mummendey, Klink, and Brown 2001; Ayub
and Jehn 2006). The need to avoid consumer ethnocentrism will prompt MNEs to
retain local partner to enhance local responsiveness. It is argued that firms
will have a preference for partial
acquisition and staged acquisitions rather than full acquisition for
market-seeking acquisitions in a highly informal institutional environment.

 

Resource-seeking acquisitions are mostly aimed at securing raw materials.
Such raw materials are embedded in host
countries and have interactions with the host country institutions. Consumers
could also exert ethnocentrism due to fear of foreign country resource
exploitation (Moeller, Harvey, Griffith, and Richey 2013). To gain legitimacy and survival, it is expected that parent MNE will opt for
partial acquisition in an informal institutional distance environment just to
enable the efficient flow of raw materials to the parent MNE. Thus, firms
investing in the resource-seeking
acquisition will more likely opt for partial acquisition rather than staged or
full acquisition.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

 

Unlike market-seeking and
resource-seeking acquisitions, strategic asset-seeking
and efficiency-seeking will require tight integration to gain access to
knowledge and competencies as well as to
achieve economies of scale and scope. This
is because they are vertical seeking affiliates that sell their output to
affiliated MNE subsidiary network than to unaffiliated subsidiary network. Such
local subsidiaries with a mandate to sell
to their affiliated network have been
argued to be more tightly integrated with the parent MNE and thus have less
subsidiary autonomy (Slangen and Beugelsdijk 2010). Most efficiency-seeking and
strategic asset-seeking investment take place in developed countries. A parent firm from developed country entering such host
countries will share a close informal
institutional environment, as a result,
will opt for full acquisition rather than partial or staged acquisition at the
time of market entry.