Reconsidering the Choice between Takeover and Greenfield Operations

This paper examines the distribution of greenfield operations vis-a-vis takeover as mode of entry for Swedish multinational finns between 1965 and 1990. The traditional view that takeovers are less risky than greenfield operations but have a lower expected rate of return, is here replaced by the perspective that different entry modes require different skills. An estimation based on the logit model finds that relatively more organizational skill, as captured by company size, number of affiliates and diversification, favours takeover. On the other hand, relatively more technological skill, reflected in R&D intensity, favours greenfield operations