Methodological issues in International Business Studies: The case of foreign establishment mode decisions by multinational firms

Prasad Padmanabhan and Kang Rae Cho

International Business Review, 1995, vol. 4, issue 1, 55-73

Abstract: Two distinct forces may mask or weaken the significance of key independent variables in studies involving the foreign establishment mode decisions by multinational corporations (MNCs): (1) the 'mild' multicollinearity between key independent variables, and (2) the effect of multiple factors 'pulling' the dependent variable in opposite directions (multidimensionality). We demonstrate the validity of these contentions using Japanese foreign direct investment data over the 1969-1991 period, and suggest that conventional logit regression analysis be supplemented with exploratory factor analysis in foreign establishment mode studies, to better understand the forces that influence the MNCs foreign establishment mode decision.

Keywords: Multicollinearity; Multidimensionality; Key; Independent; Variables; Foreign; Establishment; Mode; Studies; Exploratory; Data; Analysis; Logit; Regression; Analysis; Biases (search for similar items in EconPapers)
Date: 1995
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Citations: View citations in EconPapers (14)

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