Industry and regional patterns in sequential foreign market entry

Abstract

This study empirically investigates industry and region of origin patterns of sequential foreign market entry by multinational corporations (MNCs) at the line of business level. We use event history analysis to study sequential foreign direct investment in the United States by European and Japanese firms in the chemical and electronics industries from 1975 to 1992. Results show that European firms as well as Japanese firms first enter in their largest and strongest lines of business, and over time extend their positions by entering in lines of business that are smaller and less strong. As for industry effects, sequential entry is observed more strongly among electronics firms than among chemical firms, reflecting differences in the speed and extent of globalization of these two industries. Our findings confirm that foreign market entry is a sequential process, and show that industry effects are more important than region of origin effects.