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When a firm possesses the abilityto develop differentiated products, may
run the risk of loss of long-term revenues if it shares this knowledge with
host country firms. This is because the latter may acquire this knowledge
and decide to operate as a separate entity at a future date. This risk is
especially relevant for international transactions because interorganizational
infrastructures are often poorly developed, likely to change frequently, and
particularly weak across national boundaries [Van Ven and Poole 19891.
Therefore, when t he firm possesses these skills, higher control modes may
be more efficient. There substantial empirical support for the of higher
control modes with higher levels of product differentiation [Anderson and
Coughlan 1987; Caves 1982; Coughlan 1985; Coughlan and Flaherty 1983;
Davidson 1982; Stopford and Wells 19721.
Firms need asset powerto engage in international expansion and successto
fully compete with host country firms. Resources are needed for absorbing
the high costs of marketing, for enforcing patents and contracts, and for
achieving economies of scale [Hood and...
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This document was uploaded on 03/22/2014.
- Summer '14