The purpose of this paper is to investigate the factors affecting the choice between joint ventures and non‐equity alliances, when firms enter foreign markets.
Using a database of Italian firms compiled by the authors with 879 observations, the paper tests the possible effects of firm specific characteristics, host country institutional characteristics and cultural distance on alliance mode choice.
Using both transaction cost analysis and the resource based view, the findings demonstrate the crucial role played by firm size as well as by institutional and political features of host countries. The results concerning the role of functional activities involved and the industrial sector are mixed.
Overall, the analysis shows that it is necessary to develop a more integrated approach to understand this complex choice made by firms when expanding abroad.
