We thank the co-editor, two anonymous referees, Werner Antweiler, Peter Egger, Thierry Mayer, Farid Toubal, and participants at various conferences and seminars for helpful comments. Part of this research was carried out when Horst Raff visited the Department of Economics at the University of Otago. He wishes to thank the department for its hospitality.
Firm Productivity and the Foreign-Market Entry Decision
Article first published online: 3 JUL 2012
© 2012 Wiley Periodicals, Inc.
Journal of Economics & Management Strategy
Volume 21, Issue 3, pages 849–871, Fall 2012
How to Cite
Raff, H., Ryan, M. and Stähler, F. (2012), Firm Productivity and the Foreign-Market Entry Decision. Journal of Economics & Management Strategy, 21: 849–871. doi: 10.1111/j.1530-9134.2012.00346.x
- Issue published online: 3 JUL 2012
- Article first published online: 3 JUL 2012
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.