Entry Modes,Integration,and Performance of Foreign Subsidiaries

Abstract

Abstract:

This paper develops a dynamic discrete-choice model of the entry mode decision and a linear function of foreign subsidiary performance conditional on being foreign greenfields or foreign acquisitions through an institutional perspective.It uses the Heckman two-stage approach to analyze a sample of 501 foreign subsidiaries from China's outward FDI in 2001-2010.This study finds that subsidiary integration,characteristics of MNE parents and the host country influences the entry mode decision.Controlling for entry mode self-selection and other factors,the results show that acquisitions outperform greenfields at low and intermediate levels of subsidiary integration,but that greenfields outperform acquisitions at higher integration levels.

Key words: foreign greenfields, foreign acquisitions, institutional theory, firm performance

Yi Jingtao, Dai Lihua. Entry Modes,Integration,and Performance of Foreign Subsidiaries[J]. , 2017, 29(6): 118-128.

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