Determinants of Mncs' Mode of Entry into Emerging Markets: Some Evidence from India

Abstract

While the literature on the determinants of entry mode strategies of MNCs in new countries is significant, it largely ignores emerging markets. This paper addresses this lacuna in the literature using unique firm-level data from India. The results suggest that the basis of a MNC's strategy vis a vis large emerging markets is to enter soon after the initiation of reforms to capture the potential benefits from a "first mover" advantage, but to limit both their exposure to these markets, and the extent of technology transfer to their host country operations until a much later date.

Keywords: MNC, Greenfield, acquisition, joint venture, agency problem, transactions cost, India

JEL Classification: F23, C21