LINKING INSTITUTIONAL DISTANCE AND ENTRY MODE CHOICE OF MNES IN VIETNAM’S AGRICULTURAL SECTOR IN CONTEXT OF FREE TRADE AGREEMENT IMPLEMENTATION
This paper focuses on studying the impact of institutional distance between home and host countries on the entry mode choice of multinational enterprises (MNEs). Based on theories of transaction costs and institutional theory, we predict the trend of choosing investment forms of wholly-owned enterprises (WOEs) and joint venture enterprises (JVEs) in the agricultural sector of Vietnam in the context of free trade agreement implementation. The data of 364 MNEs from 22 different nations that directly invested in the agricultural sector of Vietnam in the period 1996–2019 were extracted from Worldwide Governance Indicators (WGI) which is provided by World Bank. An empirical investigation has been employed logistic regression. The results show positive relation between institutional distance with regard to Rule of Law and Regulatory Quality and WOE choice. Furthermore, entry mode choices of MNEs in Vietnam’s agricultural sector are also noticeably influenced by FTAs (freedom trade agreements) implementation.
Institutional distance; Entry mode; Vietnam’s agriculture sector; Free trade agreement implementation