Institutional Quality, Distance, and Entry Mode Choice: Evidence from the Global Expansion of Video Game Publishers

This thesis investigates the foreign market entry decisions of global video game publishers between 1993 and 2024, focusing on the strategic choice between cross-border acquisitions and greenfield subsidiaries. Integrating the Institution-Based View (IBV) with platform economics, this study examines how host country institutional quality and home-host institutional distance influence this choice. While traditional transaction cost theory posits that strong institutions diminish the need for high-control equity modes, this research argues that in asset-light, digital industries, robust institutional environments act as a catalyst for acquisitions by reducing informational asymmetry and safeguarding proprietary intellectual property. The empirical framework utilizes a dataset of 243 entry events reconstructed through web scraping from MobyGames, analyzed through binary logistic regression models. The results demonstrate that high host country institutional quality significantly increases the probability of choosing a cross-border acquisition over a greenfield investment. However, this relationship is negatively moderated by institutional distance, indicating that substantial normative and cognitive gaps between countries create post-acquisition integration barriers that formal governance structures cannot entirely mitigate. A deeper decomposition of the World Bank’s Worldwide Governance Indicators (WGI) reveals that informational transparency and legal predictability (Voice and Accountability, Regulatory Quality, and Rule of Law) drive M&A probability, while Political Stability shows no significant effect. Ultimately, this study contributes to international business literature by demonstrating a reversal of traditional transaction cost predictions in digital platform environments.