Revue Les Cahiers du POIDEX
Volume 10, Numéro 2, Pages 314-333
2021-12-30
The Effect Of Political And Administrative Distance On The Choice Of Market Entry Mode: Evidence From Multinational Enterprises In Algeria
Authors : Aib Hamza .
Abstract
This study examines the effect of political and administrative distance on the choice of MNEs market entry mode. Drawing on institutional theory, we hypothesize that both political and administrative distance have a negative effect on the choice of FDI. Using a sample of 87 MNEs listed in the 500 Global Fortunes, we find that administrative distance has a negative effect on the choice of FDI. Our findings also show an insignificant relationship between political distance and the choice of market entry mode. These findings enhance our understanding of MNEs choice between exporting and FDI to enter foreign markets and contribute to the development of institutional theory.
Keywords
administrative distance ; political distance ; multinational enterprise ; exporting ; FDI ; institutional theory ; market entry mode
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