Abstract
In this paper, we develop a contextual model of host country determinants to explain the impact of National Innovation Systems (NIS) variables on FDI-based entry mode choices of emerging market firms (EMFs). Particularly, we consider the effects of three NIS variables at the host country level - the volume of foreign capital inflow, the technological capability of the country and the availability of human talent – in explaining an EMF’s choice of FDI-based market entry modes. We test our hypotheses on a sample of 5865 Indian FDI-based entries between 2007 and 2014. We find that Indian firms emphasize WOS entry modes when entering host countries with high levels of inward capital flows and high market potential. The R&D investments made by the host country and the availability of human (R&D) talent in the host country also influences the choice of WOS entry modes over JVs. We discuss the implications of our findings and describe avenues for future research towards the end of the paper.
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