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Methodological issues in International Business Studies: The case of foreign establishment mode decisions by multinational firms

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  • Padmanabhan, Prasad
  • Cho, Kang Rae

Abstract

Two distinct forces may mask or weaken the significance of key independent variables in studies involving the foreign establishment mode decisions by multinational corporations (MNCs): (1) the 'mild' multicollinearity between key independent variables, and (2) the effect of multiple factors 'pulling' the dependent variable in opposite directions (multidimensionality). We demonstrate the validity of these contentions using Japanese foreign direct investment data over the 1969-1991 period, and suggest that conventional logit regression analysis be supplemented with exploratory factor analysis in foreign establishment mode studies, to better understand the forces that influence the MNCs foreign establishment mode decision.

Suggested Citation

  • Padmanabhan, Prasad & Cho, Kang Rae, 1995. "Methodological issues in International Business Studies: The case of foreign establishment mode decisions by multinational firms," International Business Review, Elsevier, vol. 4(1), pages 55-73, March.
  • Handle: RePEc:eee:iburev:v:4:y:1995:i:1:p:55-73
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    References listed on IDEAS

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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;Academy of International Business, vol. 19(3), pages 411-432, September.
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    5. Jean-François Hennart, 1991. "The Transaction Costs Theory of Joint Ventures: An Empirical Study of Japanese Subsidiaries in the United States," Management Science, INFORMS, vol. 37(4), pages 483-497, April.
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    8. Brent D Wilson, 1980. "The Propensity of Multinational Companies to Expand Through Acquisitions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 11(1), pages 59-64, March.
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    Citations

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    Cited by:

    1. Demirbag, Mehmet & Tatoglu, Ekrem & Glaister, Keith W., 2009. "Equity-based entry modes of emerging country multinationals: Lessons from Turkey," Journal of World Business, Elsevier, vol. 44(4), pages 445-462, October.
    2. Cristina López-Duarte & Esteban García-Canal, 2002. "The Effect of Firm and Host Country Characteristics on the Choice of Entry Mode: Empirical Evidence from Spanish Firms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 6(2), pages 153-168, May.
    3. Demirbag, Mehmet & Glaister, Keith W. & Tatoglu, Ekrem, 2007. "Institutional and transaction cost influences on MNEs' ownership strategies of their affiliates: Evidence from an emerging market," Journal of World Business, Elsevier, vol. 42(4), pages 418-434, December.
    4. Tatoglu, Ekrem & W. Glaister, Keith, 1998. "An analysis of motives for western FDI in Turkey," International Business Review, Elsevier, vol. 7(2), pages 203-230, April.
    5. repec:bla:jomstd:v:54:y:2017:i:3:p:304-339 is not listed on IDEAS
    6. repec:spr:manint:v:48:y:2008:i:1:d:10.1007_s11575-008-0002-3 is not listed on IDEAS
    7. Drogendijk, Rian & Slangen, Arjen, 2006. "Hofstede, Schwartz, or managerial perceptions? The effects of different cultural distance measures on establishment mode choices by multinational enterprises," International Business Review, Elsevier, vol. 15(4), pages 361-380, August.
    8. Larimo, Jorma, 2003. "Form of investment by Nordic firms in world markets," Journal of Business Research, Elsevier, vol. 56(10), pages 791-803, October.
    9. repec:spr:manint:v:51:y:2011:i:3:d:10.1007_s11575-011-0080-5 is not listed on IDEAS
    10. Desislava Dikova & Keith Brouthers, 2016. "International Establishment Mode Choice: Past, Present and Future," Management International Review, Springer, vol. 56(4), pages 489-530, August.

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