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The influence of dissemination risks, strategic control and global management skills on firms' modal decision in host countries

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  • Tan, Benjamin
  • Erramilli, Krishna
  • Liang, Tan Wee
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    Abstract

    This paper examines how firms' modal choice is influenced by their exposure to dissemination risks, need for strategic control and possession of global management skills. A probabilistic model is specified. The following hypotheses are incorporated in the model: the probability of choosing a more advanced entry, ceteris paribus, is a function of (1) the risk-adjusted expected net benefits of a firm's possession of certain types of intangible, transportable assets; (2) parent company attributes that necessitate control over its strategic resources overseas; and (3) possession of certain global resources that are specific to the firm such that their effective internalization calls for higher entry mode. The models are estimated using polychotomous regression analysis. Results generally confirm that size and possession of some knowledge-based, firm-specific strategic assets, are significantly related to advanced entry modes. They also confirm that firms opt for higher entry mode to gain control of competitive pricing in the foreign markets.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Business Review.

    Volume (Year): 10 (2001)
    Issue (Month): 3 (June)
    Pages: 323-340

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    Handle: RePEc:eee:iburev:v:10:y:2001:i:3:p:323-340

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    Related research

    Keywords: Entry mode Ordinal progression Modal choice decision Polychotomous regression;

    References

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    1. Grubaugh, Stephen G, 1987. "Determinants of Direct Foreign Investment," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 149-52, February.
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    Cited by:
    1. Canabal, Anne & White III, George O., 2008. "Entry mode research: Past and future," International Business Review, Elsevier, vol. 17(3), pages 267-284, June.
    2. Musso, Fabio & Francioni, Barbara, 2009. "Foreign markets entry mode decision for SMEs. Key factors and role of industrial districts," MPRA Paper 32153, University Library of Munich, Germany.
    3. Musso, Fabio & Francioni, Barbara, 2011. "Foreign Markets Entry Mode Decision for Italian Small and Medium-Sized Enterprises," MPRA Paper 50067, University Library of Munich, Germany, revised 31 Oct 2011.

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