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Christian-Albrechts-Universität zu Kiel

Institut für Volkswirtschaftslehre - Department of Economics
Economics Working Papers

Economics Working Papers: Abstract 2006-01




Horst Raff, Michael Ryan, Frank Stähler




Asset Ownership and Foreign-Market Entry
Abstract This paper examines the link between a firm’s owership of productive assets and its choice of foreign-market entry strategy. We find that, controlling for industry- and country-specific characteristics, the most productive firms (i.e., those owning the most assets) will enter through greenfield investment, less productive ones will choose M&A, and the least productive ones will export. In addition, the most productive firms are shown to prefer whole ownership to a joint venture. These predictions are confirmed in an econometric analysis of Japanese firm-level data.

Keywords: Foreign direct investment, merger and acquisition, joint venture, greenfield investment, firm heterogeneity, productivity

JEL classification: F12, F15




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