CHARACTERIZING MODE OF ENTRY FOR CANADIAN FOREIGN DIRECT INVESTMENT INTO THE UNITED STATES: 1980 – 1989

Abstract

We examine the entry mode choice for Canadian firms entering the United States (U.S.). Entry options are categorized into three competing modes: mergers and acquisitions; joint ventures; and subsidiaries. The unit of analysis is the foreign direct investment (FDI) transaction between a Canadian firm and an American counterpart during the period from January 1980 through December 1989. Using canonical discriminant analysis, we develop a set of variables that characterize the entry mode choice. We find transaction specific information available to senior management provides important information regarding the entry mode choice. The importance of mergers and acquisitions is particularly apparent over this sample period. Empirical evidence strongly supports our measures of resource commitment, dissemination risk, and liquidity position as important measures determining mode of entry. Joint ventures display meaningful differences related to these measures in contrast to both mergers and acquisitions, and subsidiary investments.

Citation

Bruning, E.R., Turtle, H.J. and Buhr, K. (1997), "CHARACTERIZING MODE OF ENTRY FOR CANADIAN FOREIGN DIRECT INVESTMENT INTO THE UNITED STATES: 1980 – 1989", International Journal of Commerce and Management, Vol. 7 No. 3/4, pp. 56-80. https://doi.org/10.1108/eb047356