The joint venture mode is preferred by larger and

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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 differentiation ability. The sole venture modeis also preferred by large, multinationalfirms (more so t 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 hs 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 im size but from t...
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This document was uploaded on 03/22/2014.

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