Oligopolistic reaction and multinational enterprise

“Determinants of sales globalization have been analyzed from different perspectives: oligopolistic reaction theory, resource-based view, internationalization process theories or the international new venture theory (e.g., Knickerbocker, 1973; Bloodgood et al, 1996; Johanson and Vahlne, 1990; Oviatt and McDougall, 2005).”

“…to explain firm level investment decisions and differences in cross-country flows of FDI (Buckley and Casson, 1976; Dunning, 1993; Hymer, 1976; Knickerbocker, 1973), yet while an extensive range of studies cite the positive effects that FDI can potentially have on economic growth and…”

“In support of these hypotheses, Knickerbocker (1973) found that the internationalization of US MNCs before and during the 1970s was strongly related to oligopolistic market structures in the US and displayed follow-the leader dynamics.”

“Since a foreign market entry is a visible strategic action that can change their status quo through a change in the balance of competition in a firm’s current markets (Knickerbocker, 1973), the probability of engaging in FDIs will be lower among firms with high levels of multimarket contact in the home market.”

“Head, Mayer and Ries (2002) formalize the original Knickerbocker (1973) rationale within a Cournot-type model where there is cost uncertainty and a certain minimal degree of risk aversion by firms.”

“Since Knickerbocker (1973), it is well established in the literature on foreign direct investment (FDI) that foreign entry by a firm may lead to rival reaction.”

“The bandwagon efiect (Knickerbocker, 1973), where MNEs will follow rivals into a foreign market, can be seen by the sudden flood of Japanese FDI inflow at that time.”

“…the monopolistic advantage theory (Hymer, 1976 ), product cycle theory (Vernon, 1966 ), the stage theory of internation - alization (e.g., Bilkey and Tesar, 1977 ), oligopolistic reaction theory (Knickerbocker, 1973 ), and internalization theory (Buckley & Casson, 1976 ; McDougall et al., 1994 ).”

“In the context of internationalization, rivals’ matching one another’s entries into foreign markets is referred to as “bunching” (Gimeno et al., 2005; Knickerbocker, 1973).”

“These findings are consistent with findings of Electronic copy available at: https://ssrn.com/abstract=3307981 7 Knickerbocker (1973), Shaver and Flyer (2000) and others concerning the propensity of firms to follow the locations of industry leaders.”

“While Knickerbocker, F.T (1973) stated FDI was based on the motivation behind the foreign investors were: (a) Resource seeking: Investments are made to look for more efficient production factors.”

“…1998, Czinkota, Ronkainen, Moffett, and Moynihan 1998); (5) risk diversification, spreading the companies risk profile by diversifying markets (Knickerbocker 1973); (6) economies of scale, ability to increase output and therefore reduce unit production costs, both domestically and…”

“Knickerbocker (1973) , who sought to explain the apparent clustering of FDI observed among”

“there are strategic considerations of the type first considered by Knickerbocker (1973) .”

“The approach has been extended by Knickerbocker (1973), Graham (1978) and Hughes and Oughton (1992) to take account of oligopolistic interaction to explain the cross hauling of FDI as part of a strategic game between oligopolistic firms.”

“Knickerbocker (1973), and Graham (1978, cited in Li and Guisinger 1992) suggest that MNEs often adopt a ‘follow the leader’ or ‘exchange of threats’ in their foreign investment strategy to secure competitive advantages over their competitors or as a defence strategy against their competitors.”

“Knickerbocker (1973) argued that in oligopolistic market conditions, firms in an industry tend to follow each other’s location decision.”

“Similarly in spirit, [54] argues that such “follow-the-leader” behavior is a result of risk minimization.”

“The Oligopolistic Reactions Hypothesis: Knickerbocker (1973) suggests that in an oligopolistic environment, FDI by one firm triggers a similar action by other leading firms in the industry in an attempt to maintain their market shares.”

“The known risks and uncertainties of entering into an unfamiliar foreign country lead multinational fi rms to imitate other fi rms’ actions and entry modes strategies (Knickerbocker, 1973; Guillen, 2002; Henisz and Delios, 2001).”

“…strategies (Bartlett and Goshall, 1980; Buckley and Casson, 1996; Rugman, 1981), the product and geographic cycles in production and trade (Vernon, 1966, 1979), and the pressures created by the competitive dynamics of firms as they volley for international advantage (Knickerbocker, 1973).”

“Clearly, the arguments for imitation of similar firms have been advanced by scholars such as Knickerbocker (1973) and Haveman (1994), and might be possible that MNCs will tend to mimic firms from the same home country.”

“Hinweise auf soziale Bestandteile von Konzernstrategien – dies lässt sich auf Giddens Dimension der Domination, genauer die Allokation beziehen – liefert auch die Theorie der oligopolistischen Reaktion von Knickerbocker (1973).”

“8 in which competitors establish foreign subsidiaries in rivalry with domestic competitors, has been examined for US firms in the 1960s (Flowers 1976; Knickerbocker 1973).”

“(Knickerbocker, 1973) improved the PLC model by evaluating the divergence between a firm’s actual choice of FDIs and the proposals derived under the PLC-model.”

“This theory, supported by Knickerbocker (1973), Dunning (1974), and Vaitsos (1976), asserted as its core concept that any firm functioning abroad will have competition from any domestic firm that is in an advantageous position in terms of language, the legal system, consumer’s preference, and…”

“Knickerbockers (1973) supported the idea that enterprises delocalize production abroad, in a bid to counter each other’s investments in new foreign operations.”

“For years they have acted as references and now they are beginning to show signs of slower growth, with tourism figures below those of their Mediterranean rivals (Knickerbocker, 1973; BuckleyBrooke, 1988).”

“resources of firms are the main drivers of businesses’ competitive advantages, and the utilization of the qualities of tangible or intangible resources greatly influence a firm’s performance (Hymer, 1976; Knickerbocker, 1973).”

“Knickerbocker (1973) [15], have considered an industrial organization perspective in which rms in oligopolistic industries tend to mimic the entry patterns of their rivals in an e ort to \fare no worse" than their competitors.”

“The “Oligopolistic reaction” hypothesis by Knickerbocker (1973) states that oligopolistic behavior explains a series of successive investments after one firm’s FDI in a local market.”

“…was, for both reasons, substantial.4 While accepting the principles of eclectic theory, Won Chong Gun added two further ideas to explain the activities of Korean electronics companies in the USA: the ‘growth theory of firm’ and ‘oligopolistic reaction theory’ (see also, Knickerbocker, 1973).”

“Some earlier work has dealt with multinational rivalry (Graham 1978; Knickerbocker 1973; Tsurumi 1976), and Graham (1978) hypothesized that a large company with multinational competitors, finding its domestic market invaded by a new subsidiary of a foreign multinational, is likely to retaliate by…”

“Another aspect of internationalization, the direction of expansion is explained by the strategic behaviour theory (Knickerbocker 1973).”

“Knickerbocker (1973) envisaged global competition among multinationals as an “oligopolistic reaction” where the key competitors not only sought their own interests but also predicated their strategies on pre-empting the moves of rivals.”

“Firms in an industry tend to follow each other’s location decision (Knickerbocker, 1973).”

“Most researchers built their models on one of the following theories: international trade theory [4], product life cycle theory (Vernon, 1966 [5]), the division of FDI [6], the oligopolistics reaction hypothesis [7], market imperfection theory [8], the internalizing theory [9], or the eclectic theory [10].”

“…for the firm’s choice of location and the importance of locational advantages of countries as a key factor affecting foreign production, completing prior work related to locational advantages (e.g., Vernon 1966; Knickerbrocker 1973; Rugman 1979), while ‘‘I’’ accounts for the choice of modality.”

“Knickerbocker (1973) mentions that foreign direct investment decisions of businesses operating in oligopoly market are affected by competitors FDI decisions.”

“A company, when considering FDI, tries to exploit or overcome any factor that has stimulated or motivated its management to proceed in investing in a foreign country.”

“The second is the oligopolistic reaction, which leads firms to operate in the same countries as other firms (especially domestic rivals) to avoid eroding their global competitive position (Hennart and Park, 1994; Knickerbocker, 1973).”

“This approach was subsequently followed by Lemfalussy (1961), Kindleberger (1969), Knickerbocker (1973), Caves (1974), Dunning (1974), and Vaitsos (1976).”

“However, the Catalogue for Guidance of Foreign Investment (National Development and Reform Commission, 2017) has prescribed that several industries are not open for foreign firms and several industries are open for foreign firms with a specific entry mode. Among all industries open to foreign firms, there are mainly t…”

“DOI: 10.18306/ dlkxjz.2018.03.012 418-426页 第37卷 第3期 2018年3月 地 理 科 学 进 展 Progress in Geography Vol.37, No.3 Mar. 2018 第3期 范毓婷 等：中国纺织企业海外直接投资空间格局 2 研究视角与数据基础 2.1 理论视角 20世纪中叶以来，跨国公司在欧美等发达国家 迅速发展起来并成为全球对外直接投资的主导力 量。基于这些西方跨国公司经验的对外直接投资 动因和区位选择理论成为当前国际上主流的对外 直接投资理论，主要包括Knickerbocker(1973)的生…”

“This behavior serves as a type of insurance for product pioneering firms to ensure that no investor breaks into a lead that others cannot overtake (Knickerbocker 1973).”

“Źródło: opracowanie własne na podstawie Hymer (1960), Knickerbocker (1973), Rymaryczyk (1996), Buckley i Casson (2009), Nowakowski (2000), Vernon (1996), Dunning (1979).”

“Knickerbocker (1973) takes as a starting point Vernon’s theory of the product cycle.”

“al, 2005; Levitt & March, 1988; Suchman, 1995) or when firms are under pressures of oligopolistic rivalry or face multimarket contact (Ghemawat & Thomas, 2008; Graham, 1978; Haveman & Nonnemaker, 2000; Knickerbocker, 1973).”

“In 1973, Knickerbocker firstly introduced the oligopolistic reaction theory from the perspective of strategic competition of monopolistic firms (Knickerbocker 1973).”

“The finding also supports various studies suggesting that firms imitate the moves of other rival firms (Chen & MacMillan, 1992; Karnani & Wernerfelt, 1985; Knickerbocker, 1973; Yu & Ito, 1988).”

“Caves (1993) extended Knickerbocker (1973) oligopolistic reaction (OR) hypothesis to FDI.”