Firm Productivity and the Foreign-Market Entry Decision
AbstractWe use Japanese firm-level data to examine how a firm?s productivity affects its choice of foreign-market entry strategy. We study a sequence of decisions, starting with the choice between exporting and foreign direct investment (FDI). In the case of FDI, the firm faces two options: greenfield investment or merger and acquisition (M&A). If it selects greenfield investment, it has two ownership choices: whole ownership or a joint venture. Controlling for industry- and country-specific characteristics, we find that the more productive a firm is, the more likely it is to choose FDI rather than exporting, greenfield investment rather than M&A, and whole ownership rather than a joint venture. We also find that the assumed sequence of decisions fits the data better than alternative specifications. --
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Bibliographic InfoPaper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2008,02.
Date of creation: 2008
Date of revision:
Foreign direct investment; merger and acquisition; joint venture; greenfield investment; firm heterogeneity; productivity;
Other versions of this item:
- Horst Raff & Michael Ryan & Frank Stähler, 2012. "Firm Productivity and the Foreign-Market Entry Decision," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(3), pages 849-871, 09.
- F15 - International Economics - - Trade - - - Economic Integration
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-08 (All new papers)
- NEP-BEC-2008-03-08 (Business Economics)
- NEP-COM-2008-03-08 (Industrial Competition)
- NEP-EFF-2008-03-08 (Efficiency & Productivity)
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