Abstract
Using complementary theories derived from the foreign-entry mode and alliance literatures and two databases on Japanese/US alliances and investments, this study examines the prevalence — a combination of formation and termination — of the full range of investment and cross-border linkage alternatives available to firms. We find that some combinations among the administrative forms, the knowledge flow intent between the partners, and industry-related technology and risk factors were more prevalent than others. Specifically, there were three prevalent combinations consistent with the notions of production efficiency, transaction cost efficiency and learning/adaptation: (1) wholly owned subsidiaries in low R&D-intense industries with the intent of unidirectional knowledge flow; (2) joint ventures in medium R&D-intense industries with reciprocal knowledge flows; and (3) technical agreements with reciprocal knowledge flows in high-tech industries.
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