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One piece does not a puzzle make: the first‐mover decision as one piece on the foreign investment strategy puzzle

One piece does not a puzzle make: the first‐mover decision as one piece on the foreign investment... Purpose – The purpose of this paper is to analyze the first‐mover decision as one decision of a set of strategic decisions that ultimately determine performance. Design/methodology/approach – The author used survey data collected from foreign‐invested firms in Sichuan, China, to test for evidence that first‐movers perform better than late‐movers. Findings – The results reveal that there is a first‐mover advantage when the other strategic variables are not included in the model. When the entire set of strategic variables is included, however, the first mover variable loses its significance and the willingness of the foreign partner to commit additional resources becomes the best predictor of performance. Consequently, it was argued that foreign investment strategies should be analyzed as a set of strategic decisions managers make to formulate the best mix. Originality/value – The empirical evidence for the first‐mover advantage may not be as well grounded as many have thought. When the first‐mover strategic decision is analyzed in isolation from other strategic variables, which is commonly done in many empirical studies, it indicates that firms that enter China before their competitors perform better. Unfortunately, it is more logical to assume that managers dynamically develop a set of strategic decisions that ultimately determine the firm’s performance. To extrapolate one static decision from the strategic decision set and make broad assertions about its effect of performance is an over‐simplification of the strategic decision process. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Asia Business Studies Emerald Publishing

One piece does not a puzzle make: the first‐mover decision as one piece on the foreign investment strategy puzzle

Bradley J. Koch
Journal of Asia Business Studies , Volume 8 (3): 16 – Jul 29, 2014
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Publisher
Emerald Publishing
Copyright
Copyright © 2014 Emerald Group Publishing Limited. All rights reserved.
ISSN
1558-7894
DOI
10.1108/JABS-05-2011-0021
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to analyze the first‐mover decision as one decision of a set of strategic decisions that ultimately determine performance. Design/methodology/approach – The author used survey data collected from foreign‐invested firms in Sichuan, China, to test for evidence that first‐movers perform better than late‐movers. Findings – The results reveal that there is a first‐mover advantage when the other strategic variables are not included in the model. When the entire set of strategic variables is included, however, the first mover variable loses its significance and the willingness of the foreign partner to commit additional resources becomes the best predictor of performance. Consequently, it was argued that foreign investment strategies should be analyzed as a set of strategic decisions managers make to formulate the best mix. Originality/value – The empirical evidence for the first‐mover advantage may not be as well grounded as many have thought. When the first‐mover strategic decision is analyzed in isolation from other strategic variables, which is commonly done in many empirical studies, it indicates that firms that enter China before their competitors perform better. Unfortunately, it is more logical to assume that managers dynamically develop a set of strategic decisions that ultimately determine the firm’s performance. To extrapolate one static decision from the strategic decision set and make broad assertions about its effect of performance is an over‐simplification of the strategic decision process.

Journal

Journal of Asia Business Studies – Emerald Publishing

Published: Jul 29, 2014

Keywords: China; Joint ventures; First‐mover; Foreign‐invested firms

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