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Determinants of Entry Mode Choice of MNCs in Emerging Markets : Evidence from South Africa and Egypt

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  • SUMON KUMAR BHAUMIK
  • STEPHEN GELB

Abstract

It is now stylized that the importance of foreign direct investment for developing countries and emerging markets arises from the impact of the presence of multinational corporations (MNCs) in the host country on the productivity of local firms, by way of technology diffusion and competition. There is also general agreement that the extent of technology transfer by an MNC to a developing country affiliate depends on the extent of its control on the local affiliate and that, in turn, the extent of this control depends on the mode of entry of the MNC into the host country. However, the existing literature is based on the experience of developed countries and as such does not contribute to the literature on development economics. This article addresses this lacuna using unique firm-level data from South Africa and Egypt. Our results indicate that the determinants of entry mode choice not only differ between developed and developing countries, but also among developing countries. They also bring into question the role of MNCs in fostering productivity growth in developing countries.

Suggested Citation

  • Sumon Kumar Bhaumik & Stephen Gelb, 2005. "Determinants of Entry Mode Choice of MNCs in Emerging Markets : Evidence from South Africa and Egypt," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 41(2), pages 5-24, March.
  • Handle: RePEc:mes:emfitr:v:41:y:2005:i:2:p:5-24
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    Cited by:

    1. Bassam M. AbuAl-Foul & Mohamed Soliman, 2008. "Foreign Direct Investment and LDC Exports: Evidence from the MENA Region," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 44(2), pages 4-14, March.
    2. Diego Quer & Enrique Claver, 2007. "Determinants of Spanish Foreign Direct Investment in Morocco," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 43(2), pages 19-32, April.
    3. Marlene Grande & Aurora A. C. Teixeira, 2011. "Linking entry mode choices of MNCs with countries’ corruption. A review," OBEGEF Working Papers 008, OBEGEF - Observatório de Economia e Gestão de Fraude;OBEGEF Working Papers on Fraud and Corruption.
    4. Desislava Dikova & Keith Brouthers, 2016. "International Establishment Mode Choice: Past, Present and Future," Management International Review, Springer, vol. 56(4), pages 489-530, August.
    5. Ming-Yuan Chen, 2012. "Entry Mode Choice and Performance: Evidence from Taiwanese FDI in China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(3), pages 31-51, May.
    6. H. Young Baek & David Cho & Dong-Kyoon Kim, 2012. "Multinational Real Options and Hysteresis: An Examination of FDI in Manufacturing and Hard- and Soft-Service Industries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(0), pages 7-19, January.
    7. Diego Quer & Enrique Claver, 2007. "Determinants of Spanish Foreign Direct Investment in Morocco," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 43(2), pages 19-32, April.
    8. Canabal, Anne & White III, George O., 2008. "Entry mode research: Past and future," International Business Review, Elsevier, vol. 17(3), pages 267-284, June.
    9. Ming-Yuan Chen, 2012. "Entry Mode Choice and Performance: Evidence from Taiwanese FDI in China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(3), pages 31-51, May.
    10. Reddy, Kotapati Srinivasa, 2015. "Extant Reviews on Entry-mode/Internationalization, Mergers & Acquisitions, and Diversification: Understanding Theories and Establishing Interdisciplinary Research," MPRA Paper 63744, University Library of Munich, Germany, revised 2015.
    11. H. Young Baek & David Cho & Dong-Kyoon Kim, 2012. "Multinational Real Options and Hysteresis: An Examination of FDI in Manufacturing and Hard- and Soft-Service Industries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(0), pages 7-19, January.
    12. Mukherjee Subhasree & Dhayanithy Deepak, 2017. "Effect of Inter-organizational Network on TMT – Entry Mode Choice relationship," Working papers 246, Indian Institute of Management Kozhikode.
    13. Bassam M. AbuAl-Foul & Mohamed Soliman, 2008. "Foreign Direct Investment and LDC Exports: Evidence from the MENA Region," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 44(2), pages 4-14, March.

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