Foreign Entry and Survival: Effects of Strategic Choices on Performance in International Markets

Hong Kong University of Science & Technology Business School Research Paper

Strategic Management Journal, Vol. 16, No. 5, pp. 333-351, June 1995

24 Pages Posted: 14 Aug 2007

See all articles by Jiatao Li

Jiatao Li

Hong Kong University of Science & Technology (HKUST) - Department of Management & Organization

Abstract

This paper investigates effective strategies that can reduce the risk of failure in international expansion by examining the entry and survival of foreign subsidiaries in the U.S. computer and pharmaceutical industries over the 1974-89 period. Using a hazard rate model, we examine the effects of (1) diversification strategies, (2) entry strategies, and (3) organizational learning and experience on the survival probabilities of foreign subsidiaries. The results show a higher exit rate for foreign acquisitions and joint ventures than for subsidiaries established through greenfield investments. The results also indicate a higher exit rate for subsidiaries that diversify than for those that stay in the parent firm's main product areas. Finally, the results show that firms benefit from learning and experience in foreign operations, which improves the chances of success for subsequent foreign investments. These findings shed light on the dynamic process of international expansion and the evolution of the multinational corporation.

Suggested Citation

Li, Jiatao, Foreign Entry and Survival: Effects of Strategic Choices on Performance in International Markets. Hong Kong University of Science & Technology Business School Research Paper, Strategic Management Journal, Vol. 16, No. 5, pp. 333-351, June 1995, Available at SSRN: https://ssrn.com/abstract=1006973

Jiatao Li (Contact Author)

Hong Kong University of Science & Technology (HKUST) - Department of Management & Organization ( email )

5473
Clear Water Bay, Kowloon
Hong Kong, PRC
852-2358 7757 (Phone)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
344
Abstract Views
2,326
Rank
159,017
PlumX Metrics