Determinants of FDI mode choice: Acquisition, Brownfield, and Greenfield entry in foreign markets

This study incorporates brownfield with conventional greenfield and acquisition into an analysis of the determinants of foreign direct investment (FDI) mode choice. The investigation was conducted through a mail survey of Taiwanese manufacturing firms investing in China (including Hong Kong), ASEAN, Japan, NAFTA and EU. The results showed that firms with higher relocation costs and greater post-acquisition restructuring experience will prefer acquisition to greenfield. If it is imperative for these firms to transfer their specific technological resources to the host market and to avoid competition within their own industries in the foreign market, a brownfield strategy seems to be a good compromise between acquisition and greenfield. Finally, this study proposes relevant implications for practitioners and future researchers.