Determinants in the Choice of Entry Mode for MNCs Going Offshore - The Hard Task of Getting Meaningful Results

Abstract

This paper reviews and criticizes in depth the empirical literature on foreign entry mode choice providing a motivation to perform a robustness analysis. Through a review of the theoretical approaches behind each study, as well as by comparing the way theoretical constructs are operationalized, this paper is able to pool the different studies that are part of empirical literature in the field of foreign entry mode decisions into different classes, allowing for a comparison of their results. The literature’s main results are then compared within those groups finding inconsistencies in the significance and sign found by different studies for almost every explanatory variable studied in the context of entry mode decisions. An explanation on the reasons behind those inconsistencies is also provided, yielding a strong motivation for pursuing model misspecification checks and robustness analysis. It extends previous reviews on the topic in that it also includes and compares studies focusing on multichotomous foreign entry mode decisions.