An empirical study on multinational banks decision to go abroad.
INTRODUCTIONLiterature related to Multionational banking [see for example Miller and Parkhe (1998), Blandon (1998 and 2000), Mutinelli and Piscitello (2001), Focarelli and Pozzolo (2005), Tschoegl (2004), and Cerutti and al. (2007)], mostly defends that economic and financial factors are decisive in the choice of the organizational form of representation that multinational banks (MNBs) choose when expanding abroad such as subsidiary, branch, affiliate-bank and representative office. The purpose of this paper is to consider parent-bank own characterics in its decision to choice an organizational form of establishment in foreign countries. Thus, our approach is different from macro-economic one, because it considers agency theory and resource-based theory to study the choice of organizational forms of representation abroad. As Fama and Jensen (1983) assert, the survival of an organization like multinational bank, depends on its capacity to solve agency problems that occur by doing its activities. This capacity depends on the type of organisational form chosed by the MNB to exert in a particular area of activity abroad. The agency theory make easy to understand more about the strategy of bank's internationalization. For example, in a multinational bank, agency problems which may be caused by the distance between home country and host country, would depend on the nature of the organizational form of representation abroad. The resource-based theory enables to take into account parent-bank specific characteristics such as capabilities in human resources and international experience. Different from macro-economic approach, this study presents an important contribution because it allaows to understand better how do MNBs choise among many organizational forms when going abroad. It focuses on the following two research questions : (a) Why does a MNB hold several organizational forms of reprsentation in a same host country? (b) Why do MNBs from a same home country choose to be established via different organizational forms of representation in another foreign country? The remainder of the paper is organized as follows. In the section 2, we review the literature relating to banking internati...