International Entry Mode Choice by U.S. and Japanese MNCs: A Cross-cultural Assessment of the Transaction Cost Analysis Framework

A large scale survey of top US and Japanese executives is conducted in order to assess the power of transaction cost economics (TCE) in explaining a firm\u27s choice of entry mode (e.g., joint venture vs. full ownership) when it enters a foreign market. Results suggest that several TCE tenets are useful in explaining US firms\u27 choice of entry mode. However, TCE predictions were not supported by the entry mode choices of Japanese firms. Implications of these findings for researchers and managers are discussed