Assessing the performance of foreign direct investment : the effect of motives for entry

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The 2001 Winter Educators' Conference of the American Marketing Association

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American Marketing Association


As global expansion by multinational corporations (MNCs) has become a driving force behind cross-border capital flow, performance of foreign direct investment has become an important dependent variable in recent studies of MNCs. Among the environment factors, many researchers have examined many macro-level indicators of various countries including their economic, social, cultural, political, legal environment and trade policy, and their influence on MNCs' strategies. Various firmlevel factors including country of origin, firm size and resources, multinationality, and management experience have been found to influence FDI performance. Meanwhile, many studies have focused on investment strategies such as the mode of entry, location, order of entry, location, and partnership. Despite the numerous studies, findings regarding the effect of various variables on FDI performance have been inconsistent. Many studies have focused on identifying variables without considering complex interactions among variables. Researchers have adopted different measures of performance, such as profitability, return on investment, market share, and satisfaction. Due to their distinctive competencies and constraints, firms have very different objectives when investing in other country markets. The motive for entry represents the primary objective for a firm's investment in another country. Thus, the observed differences among firms in many areas reflect their differences in motives of entry. As a matter fact, many researchers noted different motives for entry among multinationals, and how such motives may affect their operations and performance. Broadly speaking, they fall into two categories: market seekers and resource seekers. Market seekers invest in another country market to capture the untapped opportunities there.

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Recommended Citation

Cui, G., & Lui, H.-K. (2001, February). Assessing the performance of foreign direct investment: The effect of motives for entry. Paper presented at the 2001 Winter Educators' Conference of the American Marketing Association, Scottsdale, Arizona.

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