Entry Mode Strategies

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This article is addressing a very important issue that affects MNEs when engaging in foreign direct investment (FDI) in the Middle East, which is the ownership of their subsidiaries. Choosing between a full ownership (wholly-owned subsidiary) and a partial ownership (joint venture) is a very critical decision. This article provides a set of significant factors influencing their decision for managerial and policy implications. In addition, it shades the light on the neglected role of the institutional environment of MNEs’ home countries. It shows that the selection of entry mode strategies is not determined exclusively by the Monopolistic Advantages theory, Transaction Costs theory, and the Resource-based view. The Institutional theory should be considered to include further factors that are not covered by these theories. The analysis of this article rests on a well-structured methodology and the validity of the research model was tested employing different levels and techniques of statistical analysis including Exploratory Factor Analysis (EFA), Confirmatory Factor Analysis (CFA), constructs’ reliability (measured using Cronbach’s alpha), and the construct validity (measured using the convergent and discriminant validity). The research hypotheses were verified using logistic regression analysis. Finally, this article is the first of its kind to examine MNEs’ entry mode strategies in the Middle East region in terms of WOS and JV looking at two countries to allow generalization and comparison of the findings to other countries in the Middle East.

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