WTO accession and equity-based entry modes in Vietnam

It has been over 3 years since Vietnam became the 150th member of the World Trade Organization (WTO) in January 2007. Does the choice of entry mode provide a means to handle institutional changes like WTO accession in Vietnam? This study analyzes a sample of 2627 Foreign Direct Investment (FDI) firms (including those from Korea, Taiwan, Singapore, Japan, United States, Europe and China) established in Vietnam between 1992 and 2009 in order to compare the influence on the determinants of equity-based entry mode before and after Vietnam's WTO accession. Nine hypotheses were proposed and tested with regard to the determinants of the choice of entry mode - Wholly Owned Subsidiary (WOS) or Equity Joint Venture (EJV) - by FDI firms. The findings show that Vietnam's WTO accession certainly has a significant impact on foreign firms' market entry strategy in Vietnam. The results provide strong evidence of a change in the determinants of equity-based entry modes. Asian Business & Management (2012) 11, 149-169. doi:10.1057/abm.2012.3; published online 8 February 2012