Argawal et al. (1992)

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Conclusion

Firms that have a higher ability to make differentiated products are more concerned about the possible loss of their advantage in countries where there is high contractual risk, meaning they are more likely to invest than export.

Small firms with limited multinational experience are more likely to choose joint ventures in countries where there is high market potential. In countries with high market potential, firms are more likely to invest than export, due to the increased chance of returns.

Firms do not prefer sole ventures when contractual and investment risks are high, even if the firms are large and are looking at high market potential economies. However, firms which have strong assets can enter such markets. This implies that firms draw greater market power not from size but from the advantages they gain from product differentiation.