This preview shows page 1. Sign up to view the full content.
Unformatted text preview: ns.
They havebeen observed to overstate the potential risks, while understating
the potential returnsof operating in a foreign market. This makes choice of
non-investment modes more probable for these f m s [Caves and Mehra
1986; Gatignon and Anderson1988; Terpstra and Yu 19881. Conversely, firms
w t higher multinational experience may e expected to prefer investment
modes of entry. Location Advantages Firms interested in servicing foreign markets are expected to use a selective
strategy and favor entry into more attractive markets. This is because their
chances of obtaining higher returns are better in such markets. The attractiveness of a market has been characterized in termsof its market potential
and investment riskn5
Marketpotential (size and g o t ) has been foundto be an important
determinant of overseas investment[Forsyth 1972;Weinstein 1977; Khoury
1979; Choi, Tschoegl and Yu 1986; Terpstra and Yu 19881. In high market
potential countries, investment odes are expected to provide greater longm
term profitability to a f m ,compared to non-investment modes, through the
oppartunity to achieve economiesof scale and consequently lower marginal 6 j JOURNAL OF INTERNATIONAL BUSINESS STUDIES, FIRST QUARTER 1992 cost of production [Sabi 19881. Ev...
View Full Document
This document was uploaded on 03/22/2014.
- Summer '14