Firm productivity and the foreign-market entry decision
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2012
Authors
Raff, H.
Ryan, M.
Stähler, F.
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Journal of Economics and Management Strategy, 2012; 21(3):849-871
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Horst Raff, Michael Ryan, Frank Stähler
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Abstract
We use Japanese firm-level data to examine how a firm’s productivity affects its foreign-market entry strategy. The firm faces a choice between exporting and foreign direct investment (FDI). In the case of FDI, the firm has two options: greenfield investment or acquisition of an existing plant (M&A). If it selects greenfield investment, it has two ownership choices: whole ownership or a joint venture with a local company. Controlling for industry- and country-specific characteristics, we find that the more productive a firm is, the more likely it is to choose FDI rather than exporting and greenfield investment rather than M&A.
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© 2012 Wiley Periodicals, Inc.