Asset ownership and foreign-market entry
Raff, Horst; Ryan, Michael; Stähler, Frank
This paper examines the link between a firm’s owership of productive assets and its choice of foreign-market entry strategy. We find that, controlling for industry- and country-specific characteristics, the most productive firms (i.e., those owning the most assets) will enter through greenfield investment, less productive ones will choose M&A, and the least productive ones will export. In addition, the most productive firms are shown to prefer whole ownership to a joint venture. These predictions are confirmed in an econometric analysis of Japanese firm-level data.
Publisher: University of Otago
Series number: 521
Keywords: merger and acquisition; joint venture; greenfield investment; firm heterogeneity; productivity; Foreign direct investment
Research Type: Discussion Paper