MNC Entry Strategies: New Ventures or Acquisitions?

Abstract

Multinational firms may initiate affiliate activities abroad in two different ways; either by building a new establishment (greenfield investment) or by taking over an already existing firm (acquisition).The two methods can be expected to yield different costs and benefits for the host economy. Some argue, for example, that acquisitions have few positive effects on productive capacity, employment or market concentration, and that foreign purchases of local firms should therefore be prevented. Others are less pessimistic and point to possible long- run effects on the host economy, such as improvements in technology and management practices.