The New Agenda for FDI: Evidence from South Korea and Germany

The purpose of this study is to find reasonable explanations why cross-border acquisitions of foreign firms are often the preferred strategy to enter new markets. Furthermore, we formalize the choice of market entry strategy for an individual multinational enterprise (MNE) from a dynamic perspective. It is argued that, incorporating a suitable treatment irreversibility, uncertainty and flexibility related to an MNEs invetsment decision will show, that future investment opportunities play an important role when it comes to deciding whether to enter the new market via greenfield or acquisition. We also briefly discuss stylized facts given evidence from South Korea and Germany.