Firm Productivity and the Foreign‐Market Entry Decision |
| |
| Authors: | Horst Raff Michael Ryan Frank Stähler |
| |
| Institution: | 1. Department of Economics and Kiel Institute for the World Economy University of Kiel Wilhelm‐Seelig‐Platz 1, 24098 Kiel, Germany raff@econ‐theory.uni‐kiel.de;2. Department of Economics Western Michigan University 1903 W. Michigan Ave., Kalamazoo, MI 49008. michael.ryan@wmich.edu;3. Department of Economics University of Tübingen and CESifo Mohlstr. 36 (V4), 72074 Tübingen, Germany frank.staehler@uni‐tuebingen.de |
| |
| Abstract: | 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. |
| |
| Keywords: | |
|
|
