Journal Article

Firm Productivity and the Foreign Market Entry Decision


  • Raff
  • H.
  • Ryan
  • M.
  • Stähler
  • F.
Publication Date

We use Japanese firm-level data to examine how a firm’s productivity affects its foreign-market entry strategy. The firm faces a choice between exporting and foreign direct investment (FDI). In the case of FDI, the firm has two options: greenfield investment or acquisition of an existing plant (M&A). If it selects greenfield investment, it has two ownership choices: whole ownership or a joint venture with a local company. Controlling for industry- and country-specific characteristics, we find that the more productive a firm is, the more likely it is to choose FDI rather than exporting and greenfield investment rather than M&A.


JEL Classification
F12, F15

Key Words

  • ausländische Direktinvestitionen
  • firm heterogeneity
  • foreign direct investment
  • greenfield investment
  • joint venture
  • merger and acquisition
  • productivity
  • Produktivität