Journal of International Business Studies First Quarter 1992 [antikvár]

CHOICE OF FOREIGN MARKET ENTRY MODE: IMPACT OF OWNERSHIP, LOCATION AND INTERNALIZATION FACTORS Sanjeev Agarwal* and Sridhar N. Ramaswami** Iowa State University Abstract. Firms interested in servicing foreign markets face a difficult decision with regards to the choice of an entry mode. The options available to a firm include exporting, licensing, joint venture and sole venture. Several factors that determine the choice of a specific foreign market entry mode have been identified in previous literature. These factors can be classified into three categories: ownership advantages of a firm, location advantages of a market, and internalization advantages of integrating trans- actions. This study examines the independent and joint influences of these factors on the choice of an entry mode. Multinomial logistic regression model is employed to test the hypothesized effects. INTRODUCTION A firm seeking to enter a foreign market must make an important strategic decision on which entry mode to use for that market. The four most common modes of foreign market entry are exporting,1 licensing, joint venture, and sole venture. Because all of these modes involve resource commitments (albeit at varying levels), firms' initial choices of a particular mode are * Sanjeev Agarwal (Ph.D., The Ohio State University) is Assistant Professor in the Department of Marketing at Iowa State University. His research interests include multinational marketing strategies, salesforce management, and environmentalists He has previously published in Advances in International Marketing and International Trade Journal and contributed to national and international conference proceedings. **Sridhar N. Ramaswami (Ph.D., The University of Texas at Austin) is Assistant Professor in the Department of Marketing at Iowa State University. His research interests include multinational marketing strategies, organizational adaptation and effectiveness, inter-organizational relations, and self-management behavior of mar- keting employees. He has previously published in International Journal of Research in Marketing and Technology Forecasting and Social Change, and contributed to national and international conference proceedings. The authors would like to thank Jean J. Boddewyn, Farok J. Contractor, Hubert A. Gatignon, V. Kumar, Sameer Sikri, Rajendra K. Srivastava, and three anonymous reviewers for their comments on earlier versions. The authors contributed equally to this manuscript and are solely responsible for any content and remaining errors. Received: July 1990; Revised: November 1990, February & May 1991; Accepted: June 1991.