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An analysis of determinants of entry mode and its impact on performance

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  • Chen, Haiyang
  • Hu, Michael Y.
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    Abstract

    Using the transaction cost framework, this paper examines the determinants of entry mode choice by multinationals and the impact of the entry mode choice on performance in a unified framework. Using a database of foreign investment in China from 1979 to 1992, we find that the hypothesized effects of transaction cost factors on entry modes are supported. We also find that foreign investment projects whose modes are selected according to the prescription of the transaction cost theory are more successful than those whose modes are selected otherwise.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0969593101000555
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    Bibliographic Info

    Article provided by Elsevier in its journal International Business Review.

    Volume (Year): 11 (2002)
    Issue (Month): 2 (April)
    Pages: 193-210

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    Handle: RePEc:eee:iburev:v:11:y:2002:i:2:p:193-210

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    Related research

    Keywords: Transaction cost theory Entry mode and its impact on performance Foreign investment in China;

    References

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    1. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan, vol. 19(3), pages 411-432, September.
    2. Haiyang Chen & Michael Y. Hu & Joseph C. P. Shieh, 1991. "The Wealth Effect of International Joint Ventures: The Case of U.S. Investment in China," Financial Management, Financial Management Association, vol. 20(4), Winter.
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    5. Hennart, J.-F.M.A. & Reddy, S., 1997. "The choice between mergers/acquisitions and joint ventures: the case of Japanese investors in the United States," Open Access publications from Tilburg University urn:nbn:nl:ui:12-175778, Tilburg University.
    6. Erin Anderson & Hubert Gatignon, 1986. "Modes of Foreign Entry: A Transaction Cost Analysis and Propositions," Journal of International Business Studies, Palgrave Macmillan, vol. 17(3), pages 1-26, September.
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    15. Peter J Buckley & Mark Casson, 1996. "An Economic Model of International Joint Venture Strategy," Journal of International Business Studies, Palgrave Macmillan, vol. 27(4), pages 849-876, December.
    16. M Krishna Erramilli, 1991. "The Experience Factor in Foreign Market Entry Behavior of Service Firms," Journal of International Business Studies, Palgrave Macmillan, vol. 22(3), pages 479-501, September.
    17. Hu, Michael Y. & Chen, Haiyang, 1993. "Foreign ownership in Chinese joint ventures: A transaction cost analysis," Journal of Business Research, Elsevier, vol. 26(2), pages 149-160, February.
    18. Paul W Beamish & John C Banks, 1987. "Equity Joint Ventures and Theory of the Multinational Enterprise," Journal of International Business Studies, Palgrave Macmillan, vol. 18(2), pages 1-16, June.
    19. Teece, David J., 1986. "Transactions cost economics and the multinational enterprise An Assessment," Journal of Economic Behavior & Organization, Elsevier, vol. 7(1), pages 21-45, March.
    20. J Michael Geringer & Louis Hebert, 1991. "Measuring Performance of International Joint Ventures," Journal of International Business Studies, Palgrave Macmillan, vol. 22(2), pages 249-263, June.
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