Firm Productivity and the Foreign‐Market Entry Decision

Horst Raff, Michael Ryan and Frank Stähler

Journal of Economics & Management Strategy, 2012, vol. 21, issue 3, 849-871

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.

Date: 2012
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https://doi.org/10.1111/j.1530-9134.2012.00346.x

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Working Paper: Firm Productivity and the Foreign-Market Entry Decision (2008)
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