6. Entry Mode Choice
A firm becomes a multinational firm by making a foreign direct investment. A foreign direct investment is not a firm’s only means of international activity. Indeed, there are a considerable number of modes of international involvement. The choice of the mode of international involvement, sometimes called the “entry mode” or” mode of entry,” is an important and challenging one. Each entry mode comes with its own set of advantages and disadvantages that can differ for the firm making the foreign entry. The balance of advantages and disadvantages can also vary within a firm over time.
The optimal mode for a firm is highly contextual. It depends on several features of a firm as well as its position along its internationalization ...
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