Technological Asymmetry Among Foreign Investors and Mode of Entry
How does the preferred entry mode of foreign investors depend on their technological capability relative to that of their rivals? The authors develop a simple model of entry mode choice and evaluate its main testable implication using data on fore...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, D.C.
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2004/01/3207944/technological-asymmetry-among-foreign-investors-mode-entry http://hdl.handle.net/10986/14789 |
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okr-10986-147892021-04-23T14:03:20Z Technological Asymmetry Among Foreign Investors and Mode of Entry Saggi, Kamal Smarzynska Javorcik, Beata FOREIGN DIRECT INVESTMENT JOINT VENTURES TECHNOLOGIES COMMODITY MARKETS MARKETING TECHNIQUES ASSETS BUSINESS ENVIRONMENT COMMON PROPERTY COMPANY COMPETITORS CONSUMERS COURNOT COMPETITION DECISION-MAKING DEVELOPED COUNTRIES DIVERSIFICATION DIVERSIFIED COMPANIES DUOPOLY ECONOMIC ANALYSIS ECONOMIC BEHAVIOR EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EQUILIBRIUM EXPENDITURES EXPORTS FIRM SIZE FOREIGN DIRECT INVESTMENT FOREIGN FIRMS FOREIGN INVESTMENT FOREIGN INVESTORS FOREIGN OWNERSHIP FOREIGN SALES GDP GDP PER CAPITA GOVERNMENT REGULATIONS HUMAN CAPITAL IMPORTS INTELLECTUAL PROPERTY RIGHTS INTERNATIONAL TRADE JOINT VENTURES LABOR COSTS LEGISLATION MARGINAL COST MARKET ENTRY MULTINATIONAL ENTERPRISE MULTINATIONAL ENTERPRISES OWNERSHIP STRUCTURE POLICY MAKERS PROFIT MAXIMIZATION PROPERTY RIGHTS PURCHASING POWER SUPPLIERS TAX RATES TECHNOLOGY TRANSFER TOTAL OUTPUT TRANSITION ECONOMIES WTO How does the preferred entry mode of foreign investors depend on their technological capability relative to that of their rivals? The authors develop a simple model of entry mode choice and evaluate its main testable implication using data on foreign investors in Eastern European countries and the successor states of the former Soviet Union. The model considers competition between two asymmetric foreign investors and captures the following tradeoffs: while a joint venture helps a foreign investor secure a better position in the product market compared with its rival, it also requires that profits be shared with the local partner. The model predicts that the efficient foreign investor is less likely to choose a joint venture and more likely to enter directly relative to the inefficient investor. The authors' empirical analysis supports this prediction: foreign investors with more sophisticated technologies and marketing skills (relative to other firms in their industry) tend to prefer direct entry to joint ventures. This empirical finding is robust to controlling for host country-specific effects and other commonly cited determinants of entry mode. 2013-08-05T13:37:30Z 2013-08-05T13:37:30Z 2004-01 http://documents.worldbank.org/curated/en/2004/01/3207944/technological-asymmetry-among-foreign-investors-mode-entry http://hdl.handle.net/10986/14789 English en_US Policy Research Working Paper;No.3196 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, D.C. Publications & Research :: Policy Research Working Paper Publications & Research Europe and Central Asia |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
FOREIGN DIRECT INVESTMENT JOINT VENTURES TECHNOLOGIES COMMODITY MARKETS MARKETING TECHNIQUES ASSETS BUSINESS ENVIRONMENT COMMON PROPERTY COMPANY COMPETITORS CONSUMERS COURNOT COMPETITION DECISION-MAKING DEVELOPED COUNTRIES DIVERSIFICATION DIVERSIFIED COMPANIES DUOPOLY ECONOMIC ANALYSIS ECONOMIC BEHAVIOR EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EQUILIBRIUM EXPENDITURES EXPORTS FIRM SIZE FOREIGN DIRECT INVESTMENT FOREIGN FIRMS FOREIGN INVESTMENT FOREIGN INVESTORS FOREIGN OWNERSHIP FOREIGN SALES GDP GDP PER CAPITA GOVERNMENT REGULATIONS HUMAN CAPITAL IMPORTS INTELLECTUAL PROPERTY RIGHTS INTERNATIONAL TRADE JOINT VENTURES LABOR COSTS LEGISLATION MARGINAL COST MARKET ENTRY MULTINATIONAL ENTERPRISE MULTINATIONAL ENTERPRISES OWNERSHIP STRUCTURE POLICY MAKERS PROFIT MAXIMIZATION PROPERTY RIGHTS PURCHASING POWER SUPPLIERS TAX RATES TECHNOLOGY TRANSFER TOTAL OUTPUT TRANSITION ECONOMIES WTO |
| spellingShingle |
FOREIGN DIRECT INVESTMENT JOINT VENTURES TECHNOLOGIES COMMODITY MARKETS MARKETING TECHNIQUES ASSETS BUSINESS ENVIRONMENT COMMON PROPERTY COMPANY COMPETITORS CONSUMERS COURNOT COMPETITION DECISION-MAKING DEVELOPED COUNTRIES DIVERSIFICATION DIVERSIFIED COMPANIES DUOPOLY ECONOMIC ANALYSIS ECONOMIC BEHAVIOR EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EQUILIBRIUM EXPENDITURES EXPORTS FIRM SIZE FOREIGN DIRECT INVESTMENT FOREIGN FIRMS FOREIGN INVESTMENT FOREIGN INVESTORS FOREIGN OWNERSHIP FOREIGN SALES GDP GDP PER CAPITA GOVERNMENT REGULATIONS HUMAN CAPITAL IMPORTS INTELLECTUAL PROPERTY RIGHTS INTERNATIONAL TRADE JOINT VENTURES LABOR COSTS LEGISLATION MARGINAL COST MARKET ENTRY MULTINATIONAL ENTERPRISE MULTINATIONAL ENTERPRISES OWNERSHIP STRUCTURE POLICY MAKERS PROFIT MAXIMIZATION PROPERTY RIGHTS PURCHASING POWER SUPPLIERS TAX RATES TECHNOLOGY TRANSFER TOTAL OUTPUT TRANSITION ECONOMIES WTO Saggi, Kamal Smarzynska Javorcik, Beata Technological Asymmetry Among Foreign Investors and Mode of Entry |
| geographic_facet |
Europe and Central Asia |
| relation |
Policy Research Working Paper;No.3196 |
| description |
How does the preferred entry mode of
foreign investors depend on their technological capability
relative to that of their rivals? The authors develop a
simple model of entry mode choice and evaluate its main
testable implication using data on foreign investors in
Eastern European countries and the successor states of the
former Soviet Union. The model considers competition between
two asymmetric foreign investors and captures the following
tradeoffs: while a joint venture helps a foreign investor
secure a better position in the product market compared with
its rival, it also requires that profits be shared with the
local partner. The model predicts that the efficient foreign
investor is less likely to choose a joint venture and more
likely to enter directly relative to the inefficient
investor. The authors' empirical analysis supports this
prediction: foreign investors with more sophisticated
technologies and marketing skills (relative to other firms
in their industry) tend to prefer direct entry to joint
ventures. This empirical finding is robust to controlling
for host country-specific effects and other commonly cited
determinants of entry mode. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Saggi, Kamal Smarzynska Javorcik, Beata |
| author_facet |
Saggi, Kamal Smarzynska Javorcik, Beata |
| author_sort |
Saggi, Kamal |
| title |
Technological Asymmetry Among Foreign Investors and Mode of Entry |
| title_short |
Technological Asymmetry Among Foreign Investors and Mode of Entry |
| title_full |
Technological Asymmetry Among Foreign Investors and Mode of Entry |
| title_fullStr |
Technological Asymmetry Among Foreign Investors and Mode of Entry |
| title_full_unstemmed |
Technological Asymmetry Among Foreign Investors and Mode of Entry |
| title_sort |
technological asymmetry among foreign investors and mode of entry |
| publisher |
World Bank, Washington, D.C. |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2004/01/3207944/technological-asymmetry-among-foreign-investors-mode-entry http://hdl.handle.net/10986/14789 |
| _version_ |
1764430086482690048 |