Acquisition or greenfield start-up? Institutional, cultural and transaction cost influences
✍ Scribed by Keith D. Brouthers; Lance Eliot Brouthers
- Book ID
- 101240165
- Publisher
- John Wiley and Sons
- Year
- 2000
- Tongue
- English
- Weight
- 57 KB
- Volume
- 21
- Category
- Article
- ISSN
- 0143-2095
No coin nor oath required. For personal study only.
✦ Synopsis
In this paper, we develop and test a model of diversification mode choice (how firms decide between acquisitions and greenfield start-up ventures) which includes institutional, cultural, and transaction cost variables. Using a sample of Japanese firms entering western Europe, our results show the model correctly predicts over eighty-seven percent of the mode choices. Thus, we provide strong initial evidence to support using institutional, cultural and transaction cost variables to predict firms' choices between acquisitions and greenfield start-ups in international expansion. Our findings also suggest that organizations which have developed strong intangible capabilities may be able to more readily leverage these capabilities through greenfield startups.