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However low control modes will have a higher cost im

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Unformatted text preview: 1. However, low control modes will have a higher cost im compared to integrating the assets and skills within the f r if managers are unable to predict future contingencies (problembounded rationality/extemal of uncertainty) and if the market is unable to provide competing alternatives (problem of small numbers/opportunism). High external uncertainty, given bounded rationality, makes the writing and enforcement of contracts that specify every eventuality and consequent response more expensive [Anderson and Weitz 19861. Similarly, the small numbers problem makes the enforcement of contracts meaningless and possibly inefficient since the firm may not find other partners. Under these conditions, exporting and sole venture modes provide better control dueto retaining of the assets and skills within the f irm. EFFECTS OF INTERRELATIONSHIP AMONG DETERMINANT FACTORS Size/Multinational Experience and Market Potential The above discussion of the main effects suggests that investment modes would be preferred (a) by firms that are larger and that have more multinational experience, and (b) in countries that are perceived to have high market in a potential...
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