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Choice Between Non-Equity Entry Modes: An Organizational Capability Perspective

Author

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  • M Krishna Erramilli

    (Nanyang Technological University)

  • Sanjeev Agarwal

    (Iowa State University)

  • Chekitan S Dev

    (Cornell University)

Abstract

Many studies have examined the choice between different types of equity and non-equity modes; however, none has focused on the choice between different types of non-equity modes that service firms employ routinely. This study develops a theoretical framework based on the “organizational capability” perspective to explain the choice between two non-equity modes— franchising and management-service contracts. While previous studies are based on the premise that foreign market entrants choose a mode—equity or non-equity—that offers them most control given their particular circumstances, the premise of this study is that foreign entrants choose a non-equity mode that, in addition, offers effective transfer of the firm's capabilities to the host-country venture.© 2002 JIBS. Journal of International Business Studies (2002) 33, 223–242

Suggested Citation

  • M Krishna Erramilli & Sanjeev Agarwal & Chekitan S Dev, 2002. "Choice Between Non-Equity Entry Modes: An Organizational Capability Perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(2), pages 223-242, June.
  • Handle: RePEc:pal:jintbs:v:33:y:2002:i:2:p:223-242
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