School of Management and Economics, Queen's University Belfast, 25 University Square, Belfast BT7 1NN, UK; Phone: +44 28 9027–3273; Fax: +44 28 9033–5056; Email: s.bhaumik@qub.ac.uk
The author is grateful to the India (NCAER) team for help with collection of the data and for background information on FDI regulations in India; Paul Cousins, Saul Estrin and Klaus Meyer for discussions about the literature on entry mode strategy; and to Caitlin Frost, Maria Bytchkova and Gherardo Girardi for research assistance. The author remains responsible for all remaining errors. The research was made possible by a grant from the Department for International Development of the British government
While the literature on the determinants of entry mode strategies of MNCs in new countries is significant, it largely ignores emerging markets. This paper addresses this lacuna in the literature using unique firm-level data from India. The results suggest that the basis of a MNC's strategy vis-a-vis large emerging markets is to enter soon after the initiation of reforms to capture the potential benefits from a “first mover” advantage, but to limit both their exposure to these markets, and the extent of technology transfer to their host country operations until a much later date.
MNC, Greenfield, acquisition, joint venture, agency problem, transactions cost
