Control is desirable to

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Unformatted text preview: Gatignon 19861. Control is desirable to improveafirm’scompetitivepositionandmaximizethe returnson its assetsandskills.Higheroperationalcontrolresultsfrom having a greater ownership in the foreign venture. However, risks are also likely to be higher due to the assumptionof responsibility for decisionmaking and higher commitment of resources. Entry mode choices are often a compromise among these four attributes. The exporting mode is a low resource (investment) and consequently low riswreturn alternative. This mode, while providing a firm with operational control,lacks in providingmarketingcontrolthatmay be essentialfor market seeking firms. The sole venture mode, on the other hand, is a high investment and consequently high riswretum alternative that also provides ahighdegreeofcontroltotheinvesting firm. The joint venturemode involves relatively lower investment and hence provides risk, return, and control commensurate to the extent of equity participation of the investing fm. Finally, the licensing mode i a low investment, low riswreturn alters native which provides least control to...
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