The contractual risks also do not pose a threat to

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Unformatted text preview: al risks also do not pose a threat to irms that have ownership f advantages arising from size and multinationality as much as they d o to ownership advantages arising from its knowledge base and hence are not considered here. Market Potential and Investment Risk The direct effect of high market potential indicates a choiceof investment modes, while l w market potential indicates a choice of no entry. the other o On hand, the direct effect high investmentrisk indicates a choice of no entry of while low investment risk indicates a choice of investment modes. The combined effect of market potential and investmentisk, therefore, for high/low r combination should be an investment mode and f or lowhigh combination 10 JOURNAL OF INTERNATIONAL BUSINESS STUDIES, FIRST QUARTER 1992 should be no entry. However, it is not clear what modes are likely to be chosen in countries that have high market potential and at the same time are characterized by high investment risks. While this interaction effect is intuitively interesting, a review the literature did not provide theoretical of any rationale or empirical evidence that could shelp u develop a specific hypothesis. We speculate, how...
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