To lead or to wait? An application to internationalization strategies under demand uncertainty

We examine the exports versus foreign direct investment (FDI) decision under demand uncertainty for an asymmetric cost duopoly. One of the firms can lead entry before demand realization or retain flexibility enjoying an informational advantage. When the time value of information is small and for sufficiently low investment costs, follow‐the‐leader behavior in FDI arises. Relatively high investment (fixed) costs result in follow‐the‐leader exporting behavior. When the time value of information becomes significant, the potential leader will opt for a wait‐and‐see strategy. For intermediate values of investment costs, the efficient firm invests, while the rival chooses to export.     

Markteintritts- und Marktbearbeitungsstrategien kleiner und mittlerer Personalberatungen im Ausland

This article presents the results of an empirical research concerning the strategies of foreign market entry of small- and medium-sized Executive Search Firms from a resource-based perspective. The results show that they tend to mainly use cooperative forms of market entry, although not exclusively. In addition to this, they also opt for export strategies or the establishment of wholly-owned offices. The choice of a specific strategy is highly dependent on the social and human capital of an Executive Search Firm as well as on the experiences and attitudes of the management. The study is embedded in and broadens the existing knowledge of the internationalization of Professional Business Services as well as the internationalization of both small and medium-sized enterprises.     

Firm Productivity and the Foreign‐Market Entry Decision

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.     

Multinationalization in the pharmaceutical industry as a response to national health policies

This study shows that from the viewpoint of the German pharmaceutical industry the French and Italian markets require an unusual corporate international strategy. Foreign subsidiaries export bulk chemicals and semi-processed drugs. Regulation favouring direct foreign investment results in foreign affiliates carrying out nearly the same range of activities as their parent companies. Entry into these markets is thus deterred. Some conclusions are drawn on the consequences of such international competitive restrictions as they effect the market performance of international competitive processes.     

FDI对我国出口贸易的影响分析

改革开放以来,随着我国利用FD(IForeign Direct Investment,外商直接投资)的规模不断扩大,我国的对外贸易规模和对外贸易结构得到了极大地改善。本文着重从规模和结构两方面分析外国对华直接投资的发展对我国出口贸易产生的影响。从有关分析可知,就出口量而言,外资在我国出口中的作用不可低估,但就出口结构而言,外资促进我国比较优势变革的作用则相对有限。这种现象的产生与外商投资的结构有关,更与我国的投资环境、外贸与外资政策体制的矛盾有关。我国急需调整引进外资的目标和政策,增加贸易体制的透明度,从而进一步优化产业结构,提高产业档次,改善产品质量,增加产品的国际竞争力,保持我国对外贸易持续、健康、快速发展,把我国塑造成贸易强国。     

Financial advantage,outsourcing and FDI under wage uncertainty

This paper investigates outsourcing and foreign direct investment (FDI) decisions in North–South trade under conditions of wage uncertainty. The North has a financial advantage to raise capital, but the South has the advantage of low wages. If the expected outsourcing cost is lower than the in-house production cost, some outsourcing to a Southern firm is optimal. However, outsourcing to an FDI firm is superior to outsourcing to a Southern firm as well as in-house production. This finding is consistent with the rising foreign direct investment in China by Northern firms.     

成都市开放型经济发展研究

成都市自实施"引进来"、"走出去"双向并举的对外开放战略以后,对外开放水平不断提高.本文由成都市对外开放度入手,着力探讨成都经济的市场化程度及融入国际经济的程度,测算出成都对外开放度稳步上升,进而从成都市进出口贸易、外商直接投资和对外经济合作三个方面来全方位论证测算出的成都市对外开放度.但是与发达地区相比,仍存在明显差距,多层次、宽领域、全方位的开放格局尚未形成.     

Global Engagement and Returns Volatility

This paper finds that a greater reliance on foreign market sales increases the volatility of firms’ stock returns, using high‐frequency data for publicly listed Japanese manufacturing firms over the period 2000–10. The two margins of global engagement we consider, namely, exports and sales via foreign affiliates (horizontal foreign direct investment), have both a positive and economically significant effect on firm‐level volatility. We find, however, that increasing the intensity of sales through foreign affiliates has a stronger effect on volatility than a similar change in export intensity. We also uncover evidence consistent with the notion that firms’ need to use external finance to cover the substantial costs involved in reaching foreign consumers can be an important channel through which firms’ participation in international markets increases their exposure to economic uncertainty.     

试论我国企业对外直接投资的区位选择

文章在分析了影响企业对外直接投资区住选择的因素基础上，针对我国企业对外投资过于集中于发达国家及新兴工业化国家和地区的弊端，提出今后我国企业对外投资区住选择的策略应是：以发展中国家为主要的投资区域。兼顾对发达国家和地区的投资，积极慎重地发展对独联体和东欧等转轨国家的投资。     

Product Differentiation and the Location of International Production

We analyze how product differentiation influences firms' choice between exporting and foreign direct investment. When product specifications are determined endogenously, we show that there is no symmetric solution to the product specification subgame. The cost disadvantage of an exporting firm translates into a disadvantage in product specification. Overseas production is favored if this allows the investing firm to adopt a more aggressive product specification. Our analysis suggests an ambiguous relationship among location, product differentiation, and cost and demand functions, confirmed by the existence of a parameter range for which there is no pure strategy equilibrium in location choice.     

The investment decision of a Multinational Firm under uncertain quantity restrictions

In this paper we analyze the allocative investment decisions of a Multinational Firm (MNF) when it faces uncertain quantity restrictions such as a voluntary export restraint or a quota imposed by the host government. The model with uncertain quantity restrictions is analyzed further by introducing additional uncertainties such as a foreign tax rate, transfer prices, foreign exchange rates and foreign demand. The MNF invests more in the host country due to uncertain quantity restrictions. The risk averse MNF invests more in the host country despite its uncertain tax rate if the transfer price is less than the expected marginal revenue loss due to the uncertain quantity restriction. The uncertain transfer price leads the MNF to invest more in the foreign country if the tax rates are dissimilar between the two countries. Foreign demand uncertainty and foreign exchange rates uncertainty have the same effects on capital allocation between the host country and home country. In particular, we derive the condition under which the direction of investment is unambiguous.     

外商投资和贸易自由化的碳排放效应分析

本文选取我国30个省2000～2008年的面板数据,考察了外商直接投资以及外贸进出口量对我国碳排放的影响.研究结果表明,对全国大部分省市自治区而言,当期的外商直接投资和出口贸易对碳环境影响呈恶化作用,而滞后项的碳排放效应呈现清洁作用;当期的进口贸易对低碳经济的发展有促进作用,但滞后期抑制了低碳经济的有效进行.进一步对碳排放模型进行分区域分析后发现,我国碳排放的区域性差异较为明显,且东部地区的正动态性最大而中部的正动态性最小.文章最后分析产生这些结果的原因并提出了相应对策.     

CEO Experiences: Effects on the Choice of FDI Entry Mode*

abstract Drawing on the strategic management and international business literatures, this study examines the relationships between the experiences of newly selected CEOs and their choice of foreign direct investment (FDI) entry modes. Based on a sample
of 380 foreign market entry events involving acquisitions, greenfield investments, and joint ventures, our findings indicate that CEOs with less firm experience preferred acquisitions and greenfield investments to joint ventures and, older CEOs were more likely to opt for joint ventures over greenfield investments. In addition, CEOs with throughput functional experience favoured acquisitions over joint ventures and greenfield investments. Finally, CEO international experience was associated with a greater propensity to choose greenfield investments and acquisitions over joint ventures and also greenfield investments over acquisitions. The implications of the findings from the perspective of theory and managerial practice are discussed, along with possible directions for future research.     

Do Firms Increase Productivity in Order to Become Exporters?*

Recent studies find that exporters are more productive than non‐exporters and that entry into exporting does not increase firms’ productivity. Thus, firms self‐select into foreign markets. This paper examines productivity before entry into exporting. Using Chilean plant‐level data, we find that productivity and investment increase before plants begin to export. Moreover, productivity of entrants to exporting, but not that of non‐exporters and exporters, increases in response to increases in foreign income, before entry but not after that. The results suggest that the productivity advantage of future exporters may be the result of firms increasing their productivity in order to export.     

Industry and Regional Patterns in Sequential Foreign Market Entry

This study empirically investigates industry and region of origin patterns of sequential foreign market entry by multinational corporations (MNCs) at the line of business level. We use event history analysis to study sequential foreign direct investment in the United States by European and Japanese firms in the chemical and electronics industries from 1975 to 1992. Results show that European firms as well as Japanese firms first enter in their largest and strongest lines of business, and over time extend their positions by entering in lines of business that are smaller and less strong. As for industry effects, sequential entry is observed more strongly among electronics firms than among chemical firms, reflecting differences in the speed and extent of globalization of these two industries. Our findings confirm that foreign market entry is a sequential process, and show that industry effects are more important than region of origin effects.     

中国企业对外直接投资发展研究

对外直接投资是为海外的子公司供应生产要素,因此能帮助投资国避开贸易保护主义促进出口贸易的发展。本文首先对对外直接投资与出口贸易的关系进行了实证分析,然后介绍了中国企业对外直接投资现状和存在的问题,并针对存在的问题提出了一些对策和建议。     

Entry of foreign banks in Shanghai: implications for business strategies in an increasingly competitive market

This paper uses a simple mean‐variance choice model as the basis of a duration analysis of the factors determining the decision of a foreign bank to establish a branch in Shanghai, the fast developing financial centre in China. Bank attributes, namely region of origin, parent bank size, the number of international branches and their branch network in China, have a significant impact on the time to entry. A country's share of total foreign direct investment in Shanghai also significantly affects the entry decision. The attributes facilitating entry also provide the foreign bank with a competitive advantage in its foreign currency transactions in Shanghai. However, with the ensuing market liberalisations after China's WTO accession, the entrants' competitiveness may not be sustained in the local currency market, especially following the proactive business strategies of Chinese banks and the protectionist measures of the government. It is expected that only a small number of the entrants will be able to emerge as big market players in the growing domestic currency market in Shanghai. Copyright © 2005 John Wiley & Sons, Ltd.     

Entry,financing, and bankruptcy decisions: The limited liability effect

A firm, which has a privileged right to undertake an irreversible investment project, simultaneously determines whether to exercise this project and also how many bonds to issue in the presence of demand uncertainty. The firm will not exercise the project until its net value from investing immediately equals its option value from delaying investment. The firm’s choice of debt levels balances the tax advantage of debt against a cost associated with the event of bankruptcy. The effects of uncertainty, asset specificity, and the costs to purchase capital later on a firm’s entry, financing, and bankruptcy decisions are examined and compared with those in the literature.     

Investment and capital structure decisions of foreign subsidiary with international debt shifting and exchange rate uncertainty

This paper examines the impact of international debt shifting and exchange rate uncertainty on investment and capital structure decisions of foreign subsidiary. We find that debt shifting induces earlier investment, earlier default, higher leverage, and larger ex ante firm value of foreign subsidiary. When debt shifting is not so costly, the optimal leverage of foreign subsidiary increases as the tax rate differential increases. Moreover, when the correlation between exchange rate and foreign cash flow uncertainties is positive (negative, respectively), foreign investment advances as exchange rate uncertainty increases (decreases) as well as the correlation increases. These results reveal that the impact of debt shifting and exchange rate uncertainty on investment and capital structure policies cannot be ignored, supporting existing empirical findings.     

Explaining the profitability of foreign banks in Shanghai

This paper uses survival analysis to examine the factors determining the time taken for branches of foreign banks in Shanghai, China to make a positive rate of return after entering that market. Particular attributes of banks including the parent bank's size, early entry and the number of branches the bank has in China are found to reduce time to profitability. Market conditions in Shanghai, captured by levels of foreign direct investment and Eurodollar interest rates, are also found to have significant effects. A number of managerial implications are drawn from the analysis in light of the greater access to the Chinese banking markets following China's accession to the WTO. To ensure long‐term profitability in Shanghai, the foreign bank needs to contain costs and risks in the new markets, formulate an effective market penetration strategy, identify appropriate customer target groups, attract businesses from firms of different countries, seek early entry and undertake more fee‐income generating businesses. Copyright © 2003 John Wiley & Sons, Ltd.