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Foreign Market Entry: Production-Related Strategies

Author

Listed:
  • Ming-Je Tang

    (Department of Business Administration, University of Illinois at Urbana--Champaign, Champaign, Illinois 61820)

  • Chwo-Ming Joseph Yu

    (Department of Business Administration, University of Illinois at Urbana--Champaign, Champaign, Illinois 61820)

Abstract

This paper examines the profit to a firm of different production-related strategies for entering a foreign market. The entry strategies examined are foreign direct investment, exclusive licensing, multiple licensing, joint venture, and a combination of joint venture and licensing. It is shown that even though the entering firm is able to charge the optimal licensing fee, foreign direct investment generates the highest profit and is thus the dominant entry strategy in many contexts. This paper also suggests counter-strategies for responding to government restrictions on firms' entry.

Suggested Citation

  • Ming-Je Tang & Chwo-Ming Joseph Yu, 1990. "Foreign Market Entry: Production-Related Strategies," Management Science, INFORMS, vol. 36(4), pages 476-489, April.
    • Handle: RePEc:inm:ormnsc:v:36:y:1990:i:4:p:476-489
    DOI: 10.1287/mnsc.36.4.476
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    Citations

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    Cited by:

    1. Mukherjee, Arijit & Balasubramanian, N., 2001. "Technology transfer in a horizontally differentiated product market," Research in Economics, Elsevier, vol. 55(3), pages 257-274, September.
    2. Claudio Giachetti, 2013. "Competitive Aggressiveness and Performance of Developed Country-Based Firms in the Chinese Emerging Economy: The Moderating Effect of Institutional Voids and Entry Mode Degree of Control," Working Papers 1, Department of Management, Università Ca' Foscari Venezia.
    3. Tarun Kabiraj & Uday Bhanu Sinha, 2015. "Foreign Entry, Acquisition Target and Host Country Welfare," Manchester School, University of Manchester, vol. 83(6), pages 725-748, December.
    4. Pennings, Enrico & Sleuwaegen, Leo, 2004. "The choice and timing of foreign direct investment under uncertainty," Economic Modelling, Elsevier, vol. 21(6), pages 1101-1115, December.
    5. Marjit, Sugata & Beladi, Hamid & Kabiraj, Tarun, 2007. "Brand name collaboration and optimal tariff," Economic Modelling, Elsevier, vol. 24(4), pages 636-647, July.
    6. Mesak, H. I. & Mayyasi, A. M., 1995. "A simple model of international joint venture distributorships: the American-Kuwaiti experience," Omega, Elsevier, vol. 23(5), pages 525-538, October.
    7. Levary, Reuven R. & Wan, Ke, 1999. "An analytic hierarchy process based simulation model for entry mode decision regarding foreign direct investment," Omega, Elsevier, vol. 27(6), pages 661-677, December.
    8. Ruben Molina Martinez & Oscar Hugo Pedraza Rendon & Jorge Luis Alcaraz Vargas, 2012. "Multinationalization Of Mexican Companies, La Multinacionalizacion De La Empresa Mexicana," Revista Internacional Administracion & Finanzas, The Institute for Business and Finance Research, vol. 5(5), pages 71-85.
    9. Claudio Giachetti & Giancarlo Manzi & Cinzia Colapinto, 2019. "Entry Mode Degree of Control, Firm Performance and Host Country Institutional Development: A Meta-Analysis," Management International Review, Springer, vol. 59(1), pages 3-39, February.
    10. Guoliang Frank Jiang & Jeffrey J. Reuer & Colette Southam & Paul W. Beamish, 2022. "The impact of initial public offerings on SMEs’ foreign investment decisions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(5), pages 879-901, July.
    11. Hamid Beladi & May Hu & Tan (Charlene) Lee, 2022. "International joint ventures, technology licensing and ownership structure," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(4), pages 423-439, December.
    12. De Maeseneire, Wouter & Claeys, Tine, 2012. "SMEs, foreign direct investment and financial constraints: The case of Belgium," International Business Review, Elsevier, vol. 21(3), pages 408-424.
    13. Preet S Aulakh & Marshall S Jiang & Yigang Pan, 2010. "International technology licensing: Monopoly rents, transaction costs and exclusive rights," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(4), pages 587-605, May.
    14. repec:dau:papers:123456789/3201 is not listed on IDEAS
    15. Teng, Jinn-Tsair & Chern, Maw-Sheng & Kim, Ki-Hee, 2001. "Entry strategies for multinational enterprises and host countries," European Journal of Operational Research, Elsevier, vol. 133(1), pages 62-68, August.
    16. Claudio Giachetti, 2016. "Competing in Emerging Markets: Performance Implications of Competitive Aggressiveness," Management International Review, Springer, vol. 56(3), pages 325-352, June.

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