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Frank Stähler - One of the best experts on this subject based on the ideXlab platform.
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Firm Productivity and the Foreign-Market Entry Decision
Journal of Economics & Management Strategy, 2012Co-Authors: Horst Raff, Michael Ryan, Frank StählerAbstract:We use Japanese firm-level data to examine how a firm’s productivity affects its foreign-market entry strategy. The firm faces a choice between exporting and foreign direct Investment (FDI). In the case of FDI, the firm has two options: Greenfield Investment or acquisition of an existing plant (M&A). If it selects Greenfield Investment, it has two ownership choices: whole ownership or a joint venture with a local company. Controlling for industry- and country-specific characteristics, we find that the more productive a firm is, the more likely it is to choose FDI rather than exporting and Greenfield Investment rather than M&A.
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Endogenous market structure and foreign market entry
Review of World Economics, 2011Co-Authors: James Markusen, Frank StählerAbstract:Models dealing with cross-border acquisitions versus Greenfield Investment usually assume that the entry of a foreign firm into a market has effects on the outputs of all domestic firms in that market, but exit or entry of local firms is not considered. The purpose of this paper is to re-examine the acquisition versus Greenfield versus exporting question under fixed versus free entry assumptions for local firms. Our finding is that Greenfield entry and exporting options are more attractive relative to acquisition when the local market structure adjusts to foreign entry through local entry or exit than when it is fixed. With respect to welfare in the host economy, existing theory models and policy discussions maintain that the effects of Greenfield versus acquisition entry differ substantially. We show that under free entry and exit, there is no difference between the two for consumer surplus, but acquisition improves welfare a little through rent extraction by the local acquired firm. Thus the existing conventional wisdom may be leading to inappropriate policy choices by host governments.
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the choice of market entry mode Greenfield Investment m a and joint venture
International Review of Economics & Finance, 2009Co-Authors: Horst Raff, Michael Ryan, Frank StählerAbstract:Multinationals may enter a host market by different modes of foreign direct Investment (FDI). This paper examines the choice of FDI mode, and shows that the profitability of Greenfield Investment influences this choice not only directly, but also indirectly since it determines the outside option of potential acquisition targets and joint venture partners. In particular, even if Greenfield Investment is a viable option, the multinational may prefer a joint venture to M&A, and M&A to Greenfield Investment, provided that M&A and joint venture both involve sufficiently low fixed costs. The reason is that the profitability of Greenfield Investment both reduces the acquisition price in the case of M&A, and gives local firms an incentive to agree to a joint venture.
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Firm Productivity and the Foreign-Market Entry Decision
2008Co-Authors: Horst Raff, Michael Ryan, Frank StählerAbstract:We use Japanese firm-level data to examine how a firm?s productivity affects its choice of foreign-market entry strategy. We study a sequence of decisions, starting with the choice between exporting and foreign direct Investment (FDI). In the case of FDI, the firm faces two options: Greenfield Investment or merger and acquisition (M&A). If it selects Greenfield Investment, it has two ownership choices: whole ownership or a joint venture. Controlling for industry- and country-specific characteristics, we find that the more productive a firm is, the more likely it is to choose FDI rather than exporting, Greenfield Investment rather than M&A, and whole ownership rather than a joint venture. We also find that the assumed sequence of decisions fits the data better than alternative specifications.
Mark Casson - One of the best experts on this subject based on the ideXlab platform.
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analyzing foreign market entry strategies extending the internalization approach
Journal of International Business Studies, 1998Co-Authors: Peter J Buckley, Mark CassonAbstract:A new fully integrated analysis of the foreign market entry decision is presented, encompassing the choice between exporting, licensing, joint venturing and wholly owned foreign Investment. The choice between acquisition and Greenfield Investment is examined, and so too are options based on subcontracting and franchising. The model extends the insights of internalization theory, and draws on concepts from the economics of industrial organization. A special feature of the model is the distinction between Investment in production facilities and Investment in distribution facilities - an important practical distinction that has been overlooked in much of the international business literature. The strength of competition from indigenous rivals is emphasized as a determinant of entry strategy into both production and distribution.
Horst Raff - One of the best experts on this subject based on the ideXlab platform.
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Firm Productivity and the Foreign-Market Entry Decision
Journal of Economics & Management Strategy, 2012Co-Authors: Horst Raff, Michael Ryan, Frank StählerAbstract:We use Japanese firm-level data to examine how a firm’s productivity affects its foreign-market entry strategy. The firm faces a choice between exporting and foreign direct Investment (FDI). In the case of FDI, the firm has two options: Greenfield Investment or acquisition of an existing plant (M&A). If it selects Greenfield Investment, it has two ownership choices: whole ownership or a joint venture with a local company. Controlling for industry- and country-specific characteristics, we find that the more productive a firm is, the more likely it is to choose FDI rather than exporting and Greenfield Investment rather than M&A.
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the choice of market entry mode Greenfield Investment m a and joint venture
International Review of Economics & Finance, 2009Co-Authors: Horst Raff, Michael Ryan, Frank StählerAbstract:Multinationals may enter a host market by different modes of foreign direct Investment (FDI). This paper examines the choice of FDI mode, and shows that the profitability of Greenfield Investment influences this choice not only directly, but also indirectly since it determines the outside option of potential acquisition targets and joint venture partners. In particular, even if Greenfield Investment is a viable option, the multinational may prefer a joint venture to M&A, and M&A to Greenfield Investment, provided that M&A and joint venture both involve sufficiently low fixed costs. The reason is that the profitability of Greenfield Investment both reduces the acquisition price in the case of M&A, and gives local firms an incentive to agree to a joint venture.
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Firm Productivity and the Foreign-Market Entry Decision
2008Co-Authors: Horst Raff, Michael Ryan, Frank StählerAbstract:We use Japanese firm-level data to examine how a firm?s productivity affects its choice of foreign-market entry strategy. We study a sequence of decisions, starting with the choice between exporting and foreign direct Investment (FDI). In the case of FDI, the firm faces two options: Greenfield Investment or merger and acquisition (M&A). If it selects Greenfield Investment, it has two ownership choices: whole ownership or a joint venture. Controlling for industry- and country-specific characteristics, we find that the more productive a firm is, the more likely it is to choose FDI rather than exporting, Greenfield Investment rather than M&A, and whole ownership rather than a joint venture. We also find that the assumed sequence of decisions fits the data better than alternative specifications.
Pierre-guillaume Méon - One of the best experts on this subject based on the ideXlab platform.
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Good and useless FDI: The growth effects of Greenfield Investment and mergers and acquisitions
Review of International Economics, 2017Co-Authors: Philipp Harms, Pierre-guillaume MéonAbstract:We explore the effect of foreign direct Investment (FDI) on economic growth, distinguishing between mergers and acquisitions (M&As) and “Greenfield” Investment. A simple model underlines that, unlike Greenfield Investment, M&As partly represent a rent accruing to previous owners, and do not necessarily contribute to expanding the host country's capital stock. Greenfield FDI should therefore have a stronger impact on growth than M&A sales. This hypothesis is supported by our empirical results that are based on a panel of up to 127 industrialized, emerging, and developing countries over 1990 to 2010.
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Good and bad FDI: The growth effects of Greenfield Investment and mergers and acquisitions in developing countries
2014Co-Authors: Philipp Harms, Pierre-guillaume MéonAbstract:We explore the effect of foreign direct Investment on economic growth in developing countries, distinguishing between mergers and acquisitions ("M&As") and "Greenfield" Investment. A simple model underlines that, unlike Greenfield Investment, M&As partly represent a rent accruing to previous owners, and do not necessarily contribute to expanding the host country's capital stock. Greenfield FDI should therefore have a stronger impact on growth than M&A sales. This hypothesis is robustly supported by our empirical results, which show that Greenfield FDI enhances growth, while M&As have no effect, at best, in a panel of up to 78 developing and emerging countries over 1987-2005.
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The Growth Effects of Greenfield Investment and Mergers and Acquisitions: Econometric Investigation and Implication for MENA Countries
2013Co-Authors: Philipp Harms, Pierre-guillaume MéonAbstract:We explore the effect of foreign direct Investment on economic growth in developing countries, distinguishing between mergers and acquisitions (“M&As”) and “Greenfield” Investment. A simple model underlines that, unlike Greenfield Investment, M&As partly represent a rent accruing to previous owners, and do not necessarily contribute to expanding the host country’s capital stock. Greenfield FDI should therefore have a stronger impact on growth than M&A sales. This hypothesis is robustly supported by our empirical results, which show that Greenfield FDI enhances growth, while M&As have no effect, at best, in a panel of up to 78 developing and emerging countries over 1987-2005.
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The Composition of FDI in the MENA Region and Other Countries: Econometric Investigation and Implications for MENA Countries
2013Co-Authors: Philipp Harms, Pierre-guillaume MéonAbstract:We investigate the determinants of the distribution of FDI across Greenfield Investment and mergers and acquisitions in a sample containing up to 91 developed and developing countries over 1987-2005. The share of M&As is found to increase with market capitalization and better civil rights. Openness to trade reduces the share of M&As in favor of Greenfield Investment. We compare the composition of FDI flows to MENA countries to the predictions of the estimated model. We observe a great heterogeneity among those countries.
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An FDI is an FDI is an FDI? The growth effects of Greenfield Investment and mergers and acquisitions in developing countries
2011Co-Authors: Philipp Harms, Pierre-guillaume MéonAbstract:We explore the effect of foreign direct Investment on economic growth in developing countries, distinguishing between mergers and acquisitions ("M&As") and "Greenfield" Investment. A simple model underlines that, unlike Greenfield Investment, M&As partly represent a rent accruing to previous owners, and do not necessarily contribute to expanding the host country's capital stock. Greenfield FDI should therefore have a stronger impact on growth than M&A sales. This hypothesis is robustly supported by our empirical results, which show that Greenfield FDI enhances growth, while M&As have no effect, at best, in a panel of up to 78 developing and emerging countries over 1987-2005.
Paul-marc Collin - One of the best experts on this subject based on the ideXlab platform.
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Market Entry Strategies of Passenger Carmakers – The Case Study of the Czech Republic
Central European Business Review, 2015Co-Authors: Hana Machková, Paul-marc CollinAbstract:In 2014, the Czech automotive industry had a record-breaking year with 1 278 000 motor vehicles manufactured. This was a result of the Investment of three major carmakers, who entered into the Czech Republic, because they believed in the industrial capacity of the country and its strategic location in Central Europe. The goal of this article is to analyze the different entry strategies into the Czech market and to compare the results of different strategic approaches for both foreign private investors and the recipient country. The main research method used in this article is a case study. In our case studies, we will analyze the cases of the Volkswagen group and its acquisition of the manufacturer Škoda, the Greenfield Investment of Hyundai, and the strategic alliance of the French car producer PSA with Japanese Toyota who had founded the TPCA joint venture in the Czech Republic. All three case studies show examples of good practices and prove that foreign direct Investment (FDI) has the potential to generate employment, raise productivity, transfer skills and technology, enhance exports and contribute to the long-term economic development of the country.
