Effect of Dual Institutions on Foreign Market Entry Mode: A Multi-Level Analysis of Chinese Multinationals

We examine the influence of dual institutions on entry modes by examining how both home and host country institutions jointly affect MN Cs' entry mode decisions (WOS vs. JVs) when investing overseas. Based on a sample of 243 China' s MNCs and their 1615 overseas subsidiaries in 23 countries, the results of multi-level analysis suggest that different aspects of the host and home institutions affect th e entry mode decision of these firms in ways that are contrary to the conventional wisdom. Moreover, there exist interactions between institutional factors and investment type (manufacturing vs. sales & marketing). Interestingly, home and host country institutions affect entry mode decision in opposite directions. These findings highlight the need to consider the unique environments facing firms from transitional economies and the influence of dual institutional factors in studying the entry modes of MNCs from these countries.