Does Experience Matter for Patterns of Expansion by U.S. Companies in Latin America and the Caribbean?

28 Pages Posted: 21 Dec 2014

See all articles by W. Charles Sawyer

W. Charles Sawyer

University of Southern Mississippi - College of Business Administration

Rossitza B. Wooster

Portland State University

Luisa R. Blanco

Pepperdine University School of Public Policy

Date Written: December 19, 2014

Abstract

We describe expansion patterns by U.S. companies in Latin America and the Caribbean (LAC) between 1980 and 2005 using a unique sample that utilizes country, industry and time-series information on firms’ investments. We build on previous research to explore the effect of experience on firms’ preference for equity commitment. Using the time series properties of our data, we examine the extent to which previous investments in the region influence firms’ expansion patterns. Our analysis includes the traditional determinants of entry mode choices such as firm-specific factors, market seeking factors, resource seeking factors, and country specific factors. Bivariate probit results indicate that companies with previous experience in the region are more likely to commit equity going forward and this also holds for more recent companies with greater growth opportunities.

Keywords: Foreign Direct Investment, U.S. Companies, Latin America, Investment Strategies

JEL Classification: F23, N16, N26

Suggested Citation

Sawyer, W. Charles and Wooster, Rossitza B. and Blanco, Luisa R., Does Experience Matter for Patterns of Expansion by U.S. Companies in Latin America and the Caribbean? (December 19, 2014). Available at SSRN: https://ssrn.com/abstract=2540684 or http://dx.doi.org/10.2139/ssrn.2540684

W. Charles Sawyer

University of Southern Mississippi - College of Business Administration ( email )

Hattiesburg, MS 39406
United States
601-266-4489 (Phone)
601-266-4410 (Fax)

Rossitza B. Wooster (Contact Author)

Portland State University ( email )

Department of Economics
P.O.Box 751
Portland, OR 97207
United States
503.725.3944 (Phone)
503.725.3945 (Fax)

HOME PAGE: http://web.pdx.edu/~wooster/

Luisa R. Blanco

Pepperdine University School of Public Policy ( email )

24255 Pacific Coast Highway
Malibu, CA 90263
United States

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