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Spanish Company Foreign Market Entry

  • Francisco J. Más


    (Universidad de Alicante)

  • Felipe Ruiz Moreno

    (Universidad de Alicante)

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    The aim of this paper is to analyse the determinants of diversification mode (acquisition versus greenfield) through foreign direct investment considering various theories, such as those of mergers and acquisitions, transaction costs, the learning organisation, the institutional context of the company and the cultural environment of the host country, and to analyse the determinants of entry mode combining diversification mode with ownership structure decision (greenfield wholly-owned subsidiaries, greenfield joint ventures, full acquisition and partial acquisition) and proposing various research hypotheses. The methodology used estimates various binomial and multinomial logit models, over a sample of 141 Spanish manufacturing companies between 1998 and 2000, finding that entry mode into a foreign country through direct investment is mainly explained by related diversification, international and local experience, advertising intensity, cultural distance, company size and ownership structure. El propósito de este trabajo consiste en analizar, por un lado, los determinantesdel modo de diversificación (adquisición versus desarrollo interno) de la inversióndirecta en el exterior considerando diversas aproximaciones teóricas, como las defusiones y adquisiciones, costes de transacción, del aprendizaje organizativo, así comodel contexto institucional de la empresa y del entorno cultural del país receptor. Por otrolado, se examinan los determinantes de la inversión directa exterior combinando elmodo de diversificación con la estructura de la propiedad empresarial (adquisición total,adquisición parcial, filial de plena propiedad y filial de propiedad compartida)proponiendo diversas hipótesis de investigación. La metodología aplicada estimadiversos modelos logit, binomial y multinomial, sobre 141 empresas españolasmanufactureras entre 1998 y 2000, detectando que el modo de entrada medianteinversión directa exterior viene explicada por la diversificación relacionada, laexperiencia internacional y local de la empresa, la intensidad publicitaria, la distanciacultural, así como por el tamaño y estructura de la propiedad de la empresa.

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    Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie EC with number 2003-10.

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    Length: 41 pages
    Date of creation: Jun 2003
    Date of revision:
    Publication status: Published by Ivie
    Handle: RePEc:ivi:wpasec:2003-10
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    1. Christos Pantzalis, 2001. "Does Location Matter? An Empirical Analysis of Geographic Scope and MNC Market Valuation," Journal of International Business Studies, Palgrave Macmillan, vol. 32(1), pages 133-155, March.
    2. Slangen, Arjen & Hennart, Jean-François, 2007. "Greenfield or acquisition entry: A review of the empirical foreign establishment mode literature," Journal of International Management, Elsevier, vol. 13(4), pages 403-429, December.
    3. Prasad Padmanabhan & Kang Rae Cho, 1999. "Decision Specific Experience in Foreign Ownership and Establishment Strategies: Evidence from Japanese Firms," Journal of International Business Studies, Palgrave Macmillan, vol. 30(1), pages 25-41, March.
    4. Jean-François Hennart & Young-Ryeol Park, 1993. "Greenfield vs. Acquisition: The Strategy of Japanese Investors in the United States," Management Science, INFORMS, vol. 39(9), pages 1054-1070, September.
    5. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan, vol. 19(3), pages 411-432, September.
    6. Gomes-Casseres, Benjamin, 1989. "Ownership structures of foreign subsidiaries : Theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 11(1), pages 1-25, January.
    7. Mutinelli, Marco & Piscitello, Lucia, 1998. "The entry mode choice of MNEs: an evolutionary approach," Research Policy, Elsevier, vol. 27(5), pages 491-506, September.
    8. Lall, Sanjaya, 1980. "Monopolistic Advantages and Foreign Involvement by U.S. Manufacturing Industry," Oxford Economic Papers, Oxford University Press, vol. 32(1), pages 102-22, March.
    9. Pau Rabanal, 2001. "Economies of scale, trade barriers and foreign direct investment in Spain," Investigaciones Economicas, Fundación SEPI, vol. 25(1), pages 31-61, January.
    10. Zejan, Mario C, 1990. "New Ventures of Acquisitions. The Choice of Swedish Multinational Enterprises," Journal of Industrial Economics, Wiley Blackwell, vol. 38(3), pages 349-55, March.
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