The Impact of Institutional and Human Resource Distance on International Entry Strategies

Authors


Saul Estrin, Department of Management, London School of Economics, Houghton Street, London WC2A 2AE, UK (s.estrin@lse.ac.uk).

abstract

‘Distance’ between organizational contexts has been a prime concern of scholarly research into international business strategies. We extend this research by exploring the complementary roles of institutional and human resource distances on foreign investors' entry strategies. Combining institutional and resource-based theories suggests that: (1) human resource differences complement institutional differences; (2) the effects of some aspects of distance are curvilinear; and (3) the impact of distance differs between first and subsequent entries. We find empirical support for these arguments on a unique dataset of foreign direct investment in six emerging economies that incorporates multiple host as well as multiple home countries.

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