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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.

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.

Suggested Citation

  • Chen, Haiyang & Hu, Michael Y., 2002. "An analysis of determinants of entry mode and its impact on performance," International Business Review, Elsevier, vol. 11(2), pages 193-210, April.
    • Handle: RePEc:eee:iburev:v:11:y:2002:i:2:p:193-210
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