The effect of firm's experience, diversification strategy and entry mode on performance: electrical and electronics industry in Thailand

Abstract

The objective of this study is to assess the entry mode selection decision and performance of Multinational Corporations (MNCs) in Thailand, subsequent to Thai government's revision of the system to promote Foreign Direct Investment (FDI) after the financial crisis. MNCs in electrical and electronic industry that chose the Joint Venture (JV) were found to, on average, perform better than those that chose Wholly Owned Subsidiary (WOS) option, even though these performance differences were minimal. Regarding stability of the firm, WOS is financially more stable than JV. Results also indicated that performance of WOS and JV varied depending on the time under study and the performance measures being used. It was also found that a firm's degree of experience and its diversification strategy were the significant factors in determining its entry mode choice.