Foreign entry and survival: Effects of strategic choices on performance in international markets

Research output: Journal PublicationArticlepeer-review

376 Citations (Scopus)

Abstract

This paper investigates effective strategies that can reduce the risk of failure in international expansion by examining the entry and survival of foreign subsidiaries in the U.S. computer and pharmaceutical industries over the 1974‐89 period. Using a hazard rate model, we examine the effects of (1) diversification strategies, (2) entry strategies, and (3) organizational learning and experience on the survival probabilities of foreign subsidiaries. The results show a higher exit rate for foreign acquisitions and joint ventures than for subsidiaries established through greenfield investments. The results also indicate a higher exit rate for subsidiaries that diversify than for those that stay in the parent firm's main product areas. Finally, the results show that firms benefit from learning and experience in foreign operations, which improves the chances of success for subsequent foreign investments. These findings shed light on the dynamic process of international expansion and the evolution of the multinational corporation.

Original languageEnglish
Pages (from-to)333-351
Number of pages19
JournalStrategic Management Journal
Volume16
Issue number5
DOIs
Publication statusPublished - 1995
Externally publishedYes

Keywords

  • entry strategy
  • experience
  • foreign subsidiary
  • international expansion
  • survival

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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