Foreign market entry strategies and post-entry growth: Acquisitions vs greenfield investments

Danchi Tan
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Danchi Tan: Department of International Business, National Chengchi University, Taipei, Taiwan

Journal of International Business Studies, 2009, vol. 40, issue 6, 1046-1063

Abstract: We examine the relationship between the foreign market entry strategy and the subsequent growth of a subsidiary. We build upon the Penrose theory of firm growth, and on the organizational economics, international management, and foreign market entry strategy literatures. We hypothesize that the post-entry growth of acquisitions is positively associated with weak and codifiable interdependence within the multinational enterprise network, whereas the post-entry growth of greenfield investments is positively related to strong and complex interdependence. Empirical findings from a sample of Japanese subsidiaries in the US lend support to our argument. Journal of International Business Studies (2009) 40, 1046–1063. doi:10.1057/jibs.2009.1

Date: 2009
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