Unformatted text preview: herhand, this mode is not preferred when contractual and
investment risks (even in high market potential countries) are high. When
fums have the ability to develop differentiated products, they prefer this CHOICE OF FOREIGN MARKET ENTRY MODE 21 mode in higher potential markets and in markets that have higher contractual
risks. The last result is perplexing, even though it stipulates that the main
effect of contractual risks will be weakened by the presence of product
The sole venture modeis also preferred by large, multinationalfirms (more
han those choosing joint venture), andin markets with higher potential.
Firms,in general, do not prefer the sole venture when contractual nd investa
high. But, when finns
ment risks (even in high market potential countries) are
have higher abilityto develop differentiated products, theymay enter markets that are perceived to have high contractual r isks using t i mode. This
means that fitms tend to offset these risks through higher levels of product
differentiation. This implies that f r s draw greater market power not from
size but from t...
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This document was uploaded on 03/22/2014.
- Summer '14