Choice of entry modes in sequential FDI in an emerging economy

Purpose – This paper seeks to challenge the traditional wisdom that sheds light upon sequential entry modes in developed countries by exploring the dynamic entry mode choice in sequential foreign direct investment (FDI) in emerging economies.Design/methodology/approach – A review of the literature on the entry mode choice is undertaken. Based on analysing two related theories consisting of the knowledge‐based theory of the firm and organizational learning theory, entry mode choices in sequential FDI in emerging economies are investigated using both an internationalisation process model and the capability‐developing perspective, and exclusive propositions are put forward accordingly. Then, these propositions are tested on the context of China with the methodology of paired‐samples t‐tests.Findings – Based on macro‐level longitudinal data in China from 1979 to 2005, the choice of entry mode in sequential FDI in emerging economies is inconsistent with the capability‐developing theory of the firm, but is cons...

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