Date of Award


Degree Type


Degree Name

Doctor of Philosophy


One of the largest decisions faced by top managers is the selection of an appropriate wholly-owned entry mode when entering a new international market. The decision involves considerable costs and uncertain returns. Yet, it is also the most frequently used mode, a point illustrated by the fact that over 75 percent of all foreign investments utilize a wholly-owned mode. Despite this importance, few researchers have examined this selection decision.;This study uses a multi-method approach to examine the reasons why manufacturing firms select either the acquisition or the build mode when entering an international market, and the performance implications of such a decision. A few prior studies, which have examined these issues using secondary data and inductive approaches, have not been theoretically well developed and provide mixed results. This is the first study that considers the relationship between both selection and performance simultaneously using firm-specific variables controllable by managers in a deductive manner.;An eclectic theory model develops two overarching relationships. The first relates international bounded rationality and international competitive advantage to the selection of either wholly-owned entry mode. The second then relates the entry modes to different performance levels using transaction cost theory and information asymmetry arguments. The theoretical arguments result in a causal model relating various aspects of locational, ownership, and internalization advantages.;The study uses two methodologies. The first examines a Japanese Foreign Direct Investment (FDI) data-set describing Japanese investments into North America. The information is used to test the hypotheses relating international bounded rationality and entry mode selection, as well as evaluating the entry mode selected and performance, while controlling for locational competitive advantages.;The second methodology uses a survey questionnaire approach to develop measures for the hypothesized constructs. A Partial Least Squares (PLS) causal modeling analytical approach examines the interrelationship between the described hypotheses or relationships.;The results of these tests support the postulations that international competitive advantage and international bounded rationality influence the selection of wholly-owned entry modes, and that the build entry mode outperforms the acquisition mode.



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