Argawal et al. (1992)

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Size/experience and market potential

Firms which are larger and have multinational experience have a preference for high investment modes, such as FDI, in countries which have high market potential.

However, they may also choose countries with lower market potential, as the firms have enough experience to be able to achieve growth and profit objectives. Larger firms also have the resources to bear the risks of market imperfections in low potential markets, such as India and Brazil.

If entering a low potential market, these firms are more likely to choose a sole venture to satisfy global strategic needs and reduce transaction costs that can encumber joint ventures or exporting modes.

Firms which are smaller and have lower multinational experience are more likely to choose a joint venture in countries that have a higher market potential.

Risk

Conclusion