To Go Alone or Collaborate With a Local Partner? : An Examination of International Entry-Mode Choice

This paper examines directly and indirectly the attributes of focal (acquirer) firms,the attributes of target firms, and the dyadic attributes between focal and target firms. International acquisitions may be contingent not only upon home-country, industry,and firm attributes, but also upon host-country, industry, and firm attributes. Previousresearch regarding cross-border market expansion has investigated mainly either focalfirmor target-firm attributes, but not both. Furthermore, previous studies have notplaced considerable focus on inward foreign direct investment in a single countrystudy except for the United States or European markets. Thus, by focusing onmultinational firms entering the South Korean market, I investigate directly the impactof focal firms’ strategies about the choice between acquisitions and equity allianceswhen the focal firms decide to expand their boundaries overseas. Motives for international acquisitions are specific to whether entries are madethrough full or partial ownership. The study focuses on how multinationals behaviorvaries along different dimensions such as experience, nationality, and businessrelatedness. The dataset covers 153 multinational firms entering into the South Koreanmarket from 1991 to 2007. The empirical findings suggest that multinational firms’specific experience, nationality, and business relatedness have shown some implications on the choice between acquisitions and equity alliances. The focal firms’attributes illustrate why firms decide to pursue acquisition and equity alliance as partof their foreign market entry strategies.