Distance between emerging and developed economies on cross-border alliance governance

Drawing from both institutional theory and the perspective of institutional distance, we examine the influence of institutional and infrastructure distance on cross-border alliance governance mode. This study investigates 1,334 dyadic alliances between multinational enterprises (MNEs) from emerging economies and MNEs from developed economies, using hierarchical logistic regression analyses with data collected from the SDC Platinum database and other international data sources. The results demonstrate that formal and informal institutional distances affect the alliance governance mode (i.e., equity versus contractual mode). Moreover, infrastructure distance moderates the relationship between formal institutional distance and the propensity to choose an equity alliance mode. Our findings supported that an adversity advantage enhances the competency of MNEs from emerging economies. Specifically, the effect of the distances on governance mode becomes trivial when host countries are in developed economies. This study contributes to the cross-border alliance literature.