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How do firms combine different internationalisation modes? A multivariate probit approach

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  • Pinuccia Calia

    ()

  • Maria Ferrante

    ()

Abstract

Most of the literature on the relationship between firm’s participation in international markets and firm heterogeneity focuses on export and foreign direct investment. This paper considers a wider range of forms of internationalisation that firms could combine into different patterns. With the purpose of analysing the selection of heterogeneous firms into different internationalisation patterns, we jointly model the decisions on the forms of internationalisation through a multivariate probit. This model allows us to avoid any a priori assumption about the firm’s behaviour. In this context we study the complementarity/substitutability relationships between forms of internationalisation. The results obtained show that: (i) neglecting some forms could lead to an incomplete representation about the firm’s internationalisation strategy, (ii) different firm’s characteristics influence the choice of internationalisation pattern, i.e. some types of firm are more prone to choosing one type of process over another, (iii) complementarity between forms of internationalisation seems to be preferred over substitution, but some heterogeneity also arises in this context. Copyright Kiel Institute 2013

Suggested Citation

  • Pinuccia Calia & Maria Ferrante, 2013. "How do firms combine different internationalisation modes? A multivariate probit approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(4), pages 663-696, December.
  • Handle: RePEc:spr:weltar:v:149:y:2013:i:4:p:663-696
    DOI: 10.1007/s10290-013-0162-5
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    Cited by:

    1. Matthew Cole & Robert Elliott & Toshihiro Okubo, 2014. "International environmental outsourcing," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(4), pages 639-664, November.
    2. repec:spr:rvmgts:v:11:y:2017:i:3:d:10.1007_s11846-016-0201-4 is not listed on IDEAS

    More about this item

    Keywords

    Forms of internationalisation; Firm heterogeneity; Complementarity/substitutability relationship; Multivariate choice model; Maximum simulated likelihood; C35; F13; F23; L24;

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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