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Foreign-Market Entry Strategies in the European Union

  • Stiegert, Kyle W.
  • Ardalan, Archie Amir
  • Marsh, Thomas L.

This study utilized intra-firm, socio-cultural, geographical-proximity, and political-stability variables to explain bimodal foreign direct investment (FDI) patterns by agri-food and beverage multinational companies into and within the European Union. A logit framework incorporated a unique-count database of firm-level investment patterns from 1987–1998. The results showed the 1992 structural changes under the Maastricht Treaty increased the probability of wholly owned FDI modes such as greenfields and buyouts. The model also found that past modal strategies of firms, language barriers, and exchange-rate volatility all correctly explained modal investment patterns. The results provide important contributions toward understanding modal investment strategies including the role of macroeconomic changes within a custom union.

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Article provided by Food Distribution Research Society in its journal Journal of Food Distribution Research.

Volume (Year): 37 (2006)
Issue (Month): 03 (November)

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Handle: RePEc:ags:jlofdr:7067
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  1. Belderbos, Rene & Sleuwaegen, Leo, 1998. "Tariff jumping DFI and export substitution: Japanese electronics firms in Europe," International Journal of Industrial Organization, Elsevier, vol. 16(5), pages 601-638, September.
  2. Keith Head & Thierry Mayer & John Ries, 2002. "Revisiting oligopolistic reaction: are decisions on foreign direct investment strategic complements?," Sciences Po publications info:hdl:2441/c8dmi8nm4pd, Sciences Po.
  3. Farok J Contractor & Sumit K Kundu, 1998. "Modal Choice in a World of Alliances: Analyzing Organizational Forms in the International Hotel Sector," Journal of International Business Studies, Palgrave Macmillan, vol. 29(2), pages 325-356, June.
  4. Chakrabarti, Avik, 2003. "A theory of the spatial distribution of foreign direct investment," International Review of Economics & Finance, Elsevier, vol. 12(2), pages 149-169.
  5. D Sethi & S E Guisinger & S E Phelan & D M Berg, 2003. "Trends in foreign direct investment flows: a theoretical and empirical analysis," Journal of International Business Studies, Palgrave Macmillan, vol. 34(4), pages 315-326, July.
  6. Neal H. Hooker & Julie A. Caswell, 1996. "Trends in food quality regulation: Implications for processed food trade and foreign direct investment," Agribusiness, John Wiley & Sons, Ltd., vol. 12(5), pages 411-419.
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