Entry Modes for Direct Investment Determined by the Composition of Firm-Specific Skills

Scandinavian Journal of Economics, Vol. 96(4), pp. 551-60, 1994.

Posted: 22 Jul 2020

See all articles by Thomas Andersson

Thomas Andersson

Jonkoping University

Roger Svensson

Research Institute of Industrial Economics (IFN)

Date Written: 1994

Abstract

Our findings suggest that the nature and composition of skills exert a major influence on the entry mode for direct investment. Relatively more organizational skill favors takeover, while relatively more technological skill favors greenfield operations. The time variable exerted a positive impact on takeover, but the model explains the variation in entry modes just as well without time included. The quality of our data and particularly the inclusion of R&D intensity, lend support to our conclusion and may explain the difference as compared to previous studies in the field. Finally, it has been verified that earlier establishments in the host country raises the likelihood of takeover, which may be due to a desire to reduce the competitive pressure.

Keywords: Entry mode, takeover, greenfield, firm-specific skills, technlogogy, organisational

JEL Classification: F23, O33

Suggested Citation

Andersson, Thomas and Svensson, Roger, Entry Modes for Direct Investment Determined by the Composition of Firm-Specific Skills (1994). Scandinavian Journal of Economics, Vol. 96(4), pp. 551-60, 1994., Available at SSRN: https://ssrn.com/abstract=3633005

Thomas Andersson

Jonkoping University ( email )

SE-551 11 Jonkoping
Sweden

Roger Svensson (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden
+46-8-6654549 (Phone)
+46-8-6654599 (Fax)

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