Publication | March 2010
This paper uses firm-level evidence from Japanese foreign direct investment (FDI) into the United States to investigate the determinants of different modes of FDI: merger and acquisition, joint venture, new plant, and other modes.
Citable URL
There are four major modes through which firms undertake foreign direct investment (FDI): merger and acquisition (M&A), joint venture, new plant, and others. The four modes of FDI are distinct from each other, and each has its own unique advantages and disadvantages. While a large and growing empirical literature examines the determinants of FDI, very few studies examine the determinants of the different modes. The central objective of this paper is to empirically analyze the extent to which the determinants of FDI such as firm size influence the choice of one mode of FDI over another. Our analysis follows a stylized two-stage investment process. First, we look at the probability of whether a Japanese firm is willing to undertake FDI in the United States. Second, which is the innovation of this paper and its main original contribution to the FDI literature, we analyze which of the four modes of FDI will be chosen by firms that are willing to undertake FDI.
Contents
- Abstract
- Introduction
- Firm-level Japanese Data
- Determinants of FDI
- Model Specification and Empirical Results
- Concluding Observations
- References
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Published Version
Wang, Peiming, Joseph D. Alba, and Donghyun Park. 2013. "Determinants of Different Modes of FDI: Firm-Level Evidence from Japanese FDI into the US." Open Economies Review 24 (3): 425–46. https://doi.org/10.1007/s11079-012-9244-6.
