Entry Modes for Direct Investment Determined by the Composition of Firm-Specific Skills
Scandinavian Journal of Economics, Vol. 96(4), pp. 551-60, 1994.
11 Pages Posted: 22 Jul 2020 Last revised: 19 Aug 2020
Date Written: March 12, 1994
Our findings suggest that the nature and composition of skills exert a major influence on the entry mode for direct investment. Relatively more organizational skill favors takeover, while relatively more technological skill favors greenfield operations. The time variable exerted a positive impact on takeover, but the model explains the variation in entry modes just as well without time included. The quality of our data and particularly the inclusion of R&D intensity, lend support to our conclusion and may explain the difference as compared to previous studies in the field. Finally, it has been verified that earlier establishments in the host country raises the likelihood of takeover, which may be due to a desire to reduce the competitive pressure.
Keywords: Entry mode, takeover, greenfield, firm-specific skills, technology, organisational
JEL Classification: F23, O33
Suggested Citation: Suggested Citation