The Globalization of Service Multinationals in the "Triad" Regions ...

THE GLOBALIZATIONOF SERVICE MULTINATIONALS IN THE "TRIAD" REGIONS: JAPAN, WESTERN EUROPE AND NORTH AMERICA Jiatao Li* Universityof Hawaii at Manoa Stephen Guisinger** Universityof Texas at Dallas Abstract.In this study we empiricallyinvestigatethe determinants of foreign direct investment of service multinationals based in the "triad" regions:Japan, Western Europe and North America. Foreign investment decisions of 168 of the largest service firms in nine service industriesover the period 1976-1986are analyzed and hypothesesthat are developed based on findings of manufacturing FDI and studies of single service industries are tested using a logistic regression model. The applicability of the MNEFDI theories to service MNEs is tested empirically over a broad range of MNE home countries and service industries.Differences in the international behavior of service MNEs based in different countries are uncovered and analyzed. The significant expansion of foreign direct investment (FDI) in service industries during the last decade has received growing attention among researchers, corporate managers and policy makers. The growth of FDI in services has been particularly marked in developed market economies. Like their manufacturing counterparts, most large service MNEs engage in a wide range of equity and non-equity foreign involvements. Dunning [1989] reviews the conceptual and theoretical issues in applying the eclectic theory of international production to explain the international behavior of service MNEs. Boddewyn, Halbrich and Perry [1986] suggest that, although theories of FDI and the multinational enterprise (MNE) can be applied to service

*JiataoLi is AssistantProfessorof Strategyand InternationalManagementat the Universityof Hawaii at Manoa. **StephenGuisingeris Professorof hiternational Management Studiesat theUniversity of Texas at Dallas. We gratefullyacknowledgethe helpfulcommentsof Yair Aharoni,Helmy Baligh, KrishnaErramilli, Karl Sauvant,Paz EstrellaTolentino,and the anonymousJIBS reviewers.An earlierversion of this paperreceivedthe IrwinDistinguishedPaperAwardat the Academyof International Business-Southwest AnnualConferencein Houston,March 1991. This article extendsthe work of the authorsthat appearsas Chapter12 of Yair Aharoni,editor, Coalitionsand Comtpetitions, the Globalizationof ProfessionalServices,New York:Routledge,1992. Received:October1990;Revised:March& August 1991 & February1992;Accepted:February1992. 675

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JOURNAL OF INTERNATIONALBUSINESS STUDIES, FOURTH QUARTER 1992

MNEs, this must be done with extreme caution because of the distinctive characteristics of international services. Many service MNE studies are industry-or home country-specific [Boddewyn et al. 1986]. What is missing, however, is a comprehensivetest of the applicability of the MNE-FDI theories to service MNEs over a broad range of MNE home countries and service industries.As assertedby Nigh, Cho and Krishnan [1986], furtherresearch may uncover differences in the internationalbehavior of service MNEs based in differentcountriesand in differentservice industries. In this study, we provide a comprehensive test of the international behavior of service MNEs, encompassing firms based in different countries and nine different service industries. Hypotheses regarding the determinants of FDI by service MNEs are developed based on studies of FDI determinants in manufacturing and in service industries such as banking, advertising, and insurance. These hypotheses are tested through a logistic regression model using data for 168 of the largest service MNEs in nine service industries for two periods: 1976-1980 and 1980-1986. All the service MNEs in the sample are based in the triad regions: Japan, Western Europe and the United States [Ohmae 1985]. THEORETICAL BACKGROUND AND HYPOTHESES International involvement in services may take several forms, including foreign direct investment which embraces sales of services produced by foreign affiliates of MNEs [Dunning 1989; Boddewyn et al. 1986]. Such investment (FDI) is assumed to be necessary for firms to control the way in which they utilize or acquire intangible assets across national boundaries [Dunning 1988]. The eclectic paradigm of international production asserts that it is the interactionbetween the competitive advantages of service MNEs, the location advantages of potential host countries, and economies of the common governance of cross-border activities that explains the international involvement of service firms [Dunning 1989]. The literature also suggests that the mode of organizing the international involvement such as exporting, licensing and other contractual arrangements, and FDI, depends first on the transactioncosts involved and second on the extent and patternof government regulations [Buckley & Casson 1976]. In this study we focus on the formation of new foreign branches or subsidiaries in service industries. Previous empirical studies have examined the choices of MNEs in the manufacturing sectors either to export or produce abroad, and on the significance of individual variables influencing the choice of foreign location (e.g., Aharoni [1966]; Horst [1972]; Dunning [1973]; Root & Ahmed [1978]; Davidson [1980]). Most of these studies suggest that the crucial variables are likely to depend on: (a) the raison d'etre for foreign direct investment (market-oriented, resources-oriented, or part of a regional or global strategy); (b) product characteristics; (c) the behavior of competitors;

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(d) the attitudes, regulations and policies of governments of host countries [Dunning 1989]. These studies suggest that factors such as market size, oligopolistic reaction, government regulations, and firm size may have effects on foreign investment decisions of service multinationals. The unique featuresof service industrieshave to be considered when analyzing the internationalbehavior of firms in these industries. First, in most countries governments strictly control the extent and form of foreign involvements in service industries [Feketekuty 1988]. Second, because of different languages and cultural backgrounds, services supplied by MNEs to local customers may need to be adaptedto a greaterextent than manufacturingproducts. Third, some services require simultaneous production and consumption (locationboundedness). The nature of location-boundedness makes it necessary for a parent firm to have a local facility [Boddewyn et al. 1986]. Based on the previous literature, we examine seven categories of factors that are expected to influence foreign investment decisions of service MNEs. These factors lead logically to seven hypotheses that we test in a subsequent section. These hypotheses are drawn from a variety of theories. Some come from the predictions of received theory on FDI, such as the eclectic paradigm [Dunning 1988], internalizationtheory [Buckley & Casson 1976] and oligopolistic reaction [Knickerbocker 1973]. Others are based on more recent research concerning cultural distance [Hofstede 1980; Kogut & Singh 1988] and competitiveness of service industries in the home country [Porter 1990], factors whose influence on FDI has been much discussed but subject to only limited empirical testing. Our purpose is to investigate whether and to what extent existing theories, when taking into account the nature and characteristics of international services, can explain the behavior of service FDI as a first step in expanding and refining these theories to accommodate service firms. This study will also shed light on the debate on the need for developing a separatetheory for explaining service MNE activities. Market Size and Home Country Business Presence Previous studies [Scaperlanda& Mauer 1969; Dunning 1973; Agarwal 1980; Davidson 1980; Culem 1988] have shown that market size of the host country has a positive impact on the inflow of manufacturing FDI. This relationship has also been observed in the internationalization of multinational banks [Gray & Gray 1981; Rugman 1981], international advertising agencies [Weinstein 1977; Terpstra & Yu 1988], multinational insurance firms [UNCTC 1980; Schroath & Korth 1989], and in the location choice of offices of international companies [Dunning & Norman 1987]. The market size of the host country is expected to have a positive impact on the location decision of new FDI of service MNEs. Our first hypothesis examines this impact. Hi: Foreign investment of service MNEs is positively related to the market size of the host country.

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One of the motives for the early venturing abroad of service firms has been following home country client firms. This motive has been observed in international banking [Khoury 1979; Goldberg & Sanders 1980; Ball & Tschoegl 1982; Nigh et al. 1986] and in the internationaladvertising industry [Weinstein 1977; UNCTC 1979; Terpstra & Yu 1988]. The early venturing abroad of insurance, banking, and advertising firms was to supply foreign affiliates of MNEs with services they had previously supplied to their parent companies. These pre-established relationships give service MNEs certain competitive advantages over local service firns. With the globalization of markets, firms in other service industrieshave found it increasingly necessary to become multinational to win new or retain existing business [Dunning 1989]. Our second hypothesis examines this client-driven motive for service MNEs. H2: Foreign investment of service MNEs is positively related to the home country business presence in the host country. After having established foreign affiliates on the strength of their relationship with home country client firms, many service MNEs began to extend their services to the local and other foreign firms in the host market. Even though following the client can be a motive in the early stage of internationalization of service MNEs, its importance may decrease over time.1 Since service MNEs based in the triad regions may be at different stages of internationalization, we would also expect to see differences in the impact of this client-driven hypothesis. Cultural Distance and Government Regulations The need for local responsiveness or adaptation of services supplied by MNEs to local customers is likely to be the greatest in host countries with different cultures, tastes, living habits, and industrial needs [Hofstede 1980; Prahalad & Doz 1987]. The impact of culture is also expected to change over time.2In the early years of internationalexpansion, service firms followed a similar pattern to that of manufacturingfirms. They first made investments in the highly developed, culturally similar areas of the world, then in the less developed and less culturally similar countries. In this study we examine the impact of cultural differences on the international behavior of service MNEs based in the triad regions over time (1976-1986). Li and Guisinger [1991] found that cultural distance has a significant impact on the failure rate of foreign subsidiaries. Thus, we would expect that cultural distance between the home and host countries has a negative impact on FDI of service MNEs. This impact may also decrease over time. Our thirdhypothesis examines this impact. H3: Foreign investment of service MNEs is negatively related to the cultural distance between the home and host countries.


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One of the importantfactors affecting the location of service activities by MNEs in recent years has been changes in nationalregulatorypatternson controls and impedimentsof inwardFDI by service MNEs [OECD 1982; 1987a; UNCTC 1988; Walter 1985]. Nigh et al. [1986] found that the openness of the host country to new foreign branches affects the U.S. internationalbankinginvolvementin that country.The extent and form of foreign involvements in service industriesare strictly controlledin many countries,particularlyin industriesthat are consideredpolitically or culturally sensitive, such as banking, transportation,and telecommunications [UNCTC 1988]. Host governmentsalso have a varietyof fiscal instrumentsor directmeans thatfavor services by indigenouscompanies[Feketekuty1988]. Moreover, therearenon-governmental barriersto entry(imposedby professionalassociations) and performancerequirementsin several service industries[Dunning barriersincludemembershiprequire1989]. Examplesof non-governmental ments of professionalassociationsand licensing for entryinto professional business services such as legal services and accounting.Governmentsmay also impose performancerequirementsthroughdetailedsupervisionof the structureandpracticesof banks,insurancefirmsandotherfinancialcompanies [UNCTC 1988]. Ourfourthhypothesisexaminesthe impactof host government controls and impediments(degree of openness) on inward service foreign investment. H4: Foreign investmentof service MNEs is positively related to opennessof the host countryto the establishmentof new foreign service subsidiariesin that industry. CompetitiveAdvantagesof Service Industnies Nations differ markedlyin theirpatternsof nationalcompetitiveadvantage in service industries.As international competitionin servicesgrows, national competitiveadvantagein services is assuminggrowing importanceto firms and nations alike [Porter1990]. Dunning [1989] reviews the natureof the competitive advantagesof service firms and provides an extensive list of ownership,locationand internalization advantagesfor severalservice industries.ServiceMNEs can utilizeandaddvalue to theircompetitiveadvantages via FDI, eitherto supplythe service to local customersor to serve a regional or even a globalmarket.In some serviceindustries,however,the competitive advantagesof foreign MNEs seeking to establisha local presencemay not be as greatas those of domesticcompaniesor are insufficientto compensate for the additionalcosts of servicing a foreign market[Hirsch 1987]. Porter[1990]definedinternational successby a nation'sindustryas "possessing competitive advantagerelative to the best worldwide competitors." Because of existence of protection,subsidy and differingaccountingconventions,neitherdomesticprofitabilitynor the existence of some exportsis

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a reliable indicator of competitive advantage for an industry. He suggests the best measure of international competitive advantage as either, (1) the presence of substantial and sustained exports to a wide array of other nations and/or (2) significant outbound foreign investment based on skills and assets in the home country.Because of the unique features of some service industries such as location-boundedness and limited tradeability [Sauvant 1986], we measure the competitiveness of service industries by focusing on the relative importance of outward and inward foreign investment in services (see our ICI index in the next section). Our fifth hypothesis examines the impact of competitiveness of the service industriesin the home country. the intemnational H5: Foreign investment of service MNEs is positively related to the international competitiveness of the service industry in the home country. Oligopolistic Reaction One of the motives for FDI by service MNEs is to protect or strengthen an international market position vis-a-vis one's major competitors. Firms in these oligopolistic industries will compete in each other's territories and thus lead to a "follow the leader" pattern of foreign investment by service MNEs. There is a strong suggestion that large MNEs often adopt a "follow the leader" or "exchange of threats" strategy [Knickerbocker1973; Flowers 1976; Graham 1978]. Widespread evidence in support of this oligopolistic strategy can be found in the investment patternsof the leading oil, automobile, pharmaceutical,semiconductor and consumer electronics companies. Studies of U.S. advertising FDI also support this hypothesis [Terpstra & Yu 1988]. The interaction between the leading competitors may affect the location and financing of FDI by service MNEs [Dunning & Norman 1987]. This leads to our sixth hypothesis. H6: Foreign investment of service MNEs is positively related to the global oligopolistic reaction in the host country. Firm Size and Growth Firm size has been shown to be positively related to FDI in manufacturing [Horst 1972; Grubaugh1987; Culem 1988]. Horst [1972] studied the relationship between a firm's decision to invest abroad and the firm's characteristics and found that firm size was the only significant factor. The Hymer [1960] hypothesis emphasizes the importanceof the size of the firn and the diversity of the firm's products. Within any industry the Hymer hypothesis seems most relevant since if only size matters, the reason any one firm within the industry decides to invest directly in foreign countries is to compete with the other oligopolists. Firm size has been shown to have a positive impact on the international behavior in several service industries such as banking and advertising [Ball & Tschoegl 1982; Terpstra & Yu 1988]. Since we


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examine the internationalbehaviorof the top fifteen or top thirty service MNEs in nine industries,we focus instead on a dynamic measure, the growthof firmsize.3Ourseventhhypothesisexaminesthis dynamicimpact. H7: Foreigninvestmentof service MNEs is positivelyrelatedto the growthof size of the service firms. MODELAND VARIABLES To investigate the statistical significance of these hypotheses, we use a binarydependentvanrableto expresswhetheror not a serviceMNE increased its numberof affiliates in a foreign countryover a specific period of time. The logistic regressionmodel is as follows: P[FI=1] = 1/ 1 + exp[-(Po + p1GDP+ P2FDI+ P3CD+ P40PEN + P5JCI +

P60LIGOP+ P7GSIZE)]}.

(1)

We compiled data for 158 of the largest service MNEs in eight service industriesfor the 1976-1980 periodand 168 of the largestservice MNEs in nine service industriesfor the 1980-1986 period from publicationsof the UN Centreon TransnationalCorporations(UNCTC)[1988]. The datalisted the numberof foreignaffiliateseach service MNE had in five host countries (regions): the U.S., Canada,Japan,Western Europe and other developed countries(AustraliaandNew Zealand)in 1976, 1980 and 1986. We focused on serviceMNEs basedin the triadregions(homecountries):Japan,Westem Europeand the United States.Firmsfrom these regions accountfor 95% of largestservice MNEs in these nine industries.4Datafor 1976 and 1980 were frequentlymissing. We collected some of the missing data from related industrydirectories.Table 1 containsthis expandeddata set. The industriescovered in this study includeinsurance,reinsurance,trading, retailing,accounting,advertising,construction,publishingand airlines.We did not examinemultinational banksherefor two reasons:(1) Comprehensive data on FDI of multinationalbanks are not availablefrom our major data sources; (2) There exist extensive studies on the internationalbehavior of multinationalbanks (e.g., Khoury [19791 Goldberg & Saunders [1980]; Gray & Gray [1981]; Rugman[1981]; Ball & Tschoegl [1982]; Nigh et al. [1986]). Forthepenrod1976-80,the valueof ourdependentvariable,foreigninvestment (P[FI=1]), is one if a service MNE increasedits numberof affiliates from 1976 to 1980 in a given host region and zero otherwise.5We applied the same method to the data for the 1980-86 period. The marketsize of a host country(GDP) is measuredby Gross Domestic Productin 1976 and in 1980 respectivelyfor the two periods(in trillionsof U.S. dollars).The sources of these data are the World Bank [1978, 1982].

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TABLE1 A Summary of Sample Data, 1976-1986 (number of parent service MNEs)

Industry Finance-related Insurance Reinsurance

U.S.

Home Country of Service MNEs 1976-1980 1980-1986 Japan E.C. Japan E.C. Total U.S.

13 5

7 1

9 9

29 15

14 5

7 1

9 9

Total 30 15

Trade-related Wholesale

-

13

3

16

13

3

16

Retail

18

5

6

29

18

5

6

29

n/a 10

n/a 2

n/a 6

18

6 11

2

1 6

7 19

6

8

6

20

6

8

6

20

Business Services Accounting Advertising Construction Other Services Publishing

8

5

13

8

5

13

Airlines

8

2

8

18

9

2

8

19

68

38

52

158

77

38

53

168

Total

-

The market size for Western Europe is the sum of the GDPs of the member countries. Since disaggregated data are not available for each host country in Europe, U.S. and Japanese service firms are assumed to invest in Europe to pursue the regional strategy (the European market). The home country business presence in a host country (FDI) is measured by the book value of the foreign direct investment position from the home country in 1976 and in 1980 respectively (in 100 billions of U.S. dollars). Data are collected from U.S. Department of Commerce [1984], OECD [1987b], UNCTC [1988] and from various sources as compiled by Dunning and Cantwell [1987]. The growth of firm size (GSIZE) was measured by the annual growth rate in revenues (sales) of service MNEs over the two periods. Data are derived from UNCTC [1988]. We drew measures of cultural distance (CD) between the home and host countries from the work of Hofstede [1980]. Hofstede found that differences in national cultures vary substantially along four dimensions: uncertainty avoidance,individuality,toleranceof power distance,and masculinity-femininity. Using Hofstede's indices and following the methodology by Kogut and Singh [1988], a composite index was formed based on the deviation along each of four cultural dimensions to measure the cultural distance between the home and host countries. We developed an openness index (OPEN) to measure the openness of service industryi, in countryj, to the establishmentof new foreign service subsidiaries.


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The degrees of government controls and impediments affecting inward FDI in each service industry are estimated on an integer scale of one to four, one representing industries with the most restrictive control and four representing industries with little or no controls and impediments on inward FDI in 1980 and in 1986 respectively. We derived the openness index based on two major factors: (1) controls of entry, establishment, and ownership of foreign investment in service industries; and (2) policies bearing on the operationsand competitiveopportunitiesof foreign affiliates.We also considered other factors to the extent that data were available. These factors include nationality requirements,economic regulations affecting the scope of foreign participation, and investment incentives and performance requirements [UNCTC 1988]. The major sources of data are OECD [1982, 1987a], with supplementary data from USTR [1984, 1986] and UNCTC [1983-1988]. We developed a new measure for international competitiveness of service MNEs. Our internationalcompetitive index (ICI) is a synthesis of the revealed comparative advantage (RCA) index as developed by Balassa [1965, 1977] and the intra-industry foreign direct investment (IIFDI) index as developed by Norman and Dunning [1984] and Dunning [1988]. We define the international competitiveness index (ICIiy)as: lciij = (Qij - 1ij)/(Qij + lij),

(2)

where Qij is the number of subsidiaries in industry i formed overseas by firms based in country j; and Iij is the number of subsidiaries in industry i formed in country j by firms not based in country j. We calculated the ICI index for the nine service industries in the triad regions for both 1980 and 1986, using data from UNCTC [1988] (Table 2). With this ICI index, we can analyze the international competitiveness of one country's service industryrelative to the same industryin other countries. It should be noted that the index for international competitiveness works well under the condition that there are no government restrictions on both inward and outwardforeign investment. Because service industriesare affected by significant government regulations, future research is needed to extend this measure to cases with government restrictions. The global oligopolistic reaction(OLIGOP)is measuredby the following model: OLIGOPiJ = Cij/Pij

(3)

where Cii is the number of other foreign (parent) service firms with affiliates in industry i, host country j, besides the service MNE in question; Pi1 is the total number of all foreign parent service firms that could establish affiliates in industry i, host country j, in 1976 and 1980 respectively. The measure is similar to the oligopolistic measure used by Terpstraand Yu [1988], with the extension that we consider the global oligopolistic reaction, thus more accurately reflecting the reality of global competition in service industries.

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TABLE2 InternationalCompetitiveness Index ICI,j= (Qii - l ?j) (QM+ Ii) iCii1 = the international competitive index of industry i, in home country j;

Qqj = the number of subsidiaries in industry i formed overseas by firms based in country j; = the number of subsidiaries in industry i formed in country i by firms not based in country j. -1 < Iclij < 1, when ICI=-I, industry i in home country j is the least compefitive among world competitors; when ICij=l, industry i in home country j is the most competitive among world competitors. Home Country of Service MNEs U.S. Industry Insurance Reinsurance Trading Retail Accounting Advertising Construction Publishing Airline

Japan

E.C.

1980

1986

1980

1986

1980

1986

0.35 0.11 -1.00 0.83 n/a 0.99 0.34 -0.07 -0.40

0.19 0.31 -1.00 0.53 0.82 0.85 -0.30 -0.24 -0.48

0.54 0.00 0.99 1.00 n/a -0.17 0.91 -1.00 -1.00

0.25 1.00 0.99 0.60 -1.00 0.78 0.95 -1.00 0.00

0.07 0.25 -0.04 -0.39 n/a -0.80 -0.41 0.03 0.12

-0.03 -0.05 -0.28 -0.20 -0.39 -0.64 -0.02 0.27 0.09

RESEARCHFINDINGS The statistical analysis is performed with the logistic regression procedure in a supplement to the statistical package of SAS. We analyzed the logistic regression model for firms in the overall sample over the two periods. The total number of observations for the 1976-80 period is 684 and for the 1980-86 period, 725. Separate analyses are also perforned for the U.S., Japanese and European service MNEs. The descriptive statistics and correlation matrices of the study variables for overall and regional models are presented in Appendix 1-2. Because of multicollinearity in the data, two models are presented for each analysis. This procedure gives us a better picture of important variables that we may not observe in a single model. Results of the logistic regression analyses are presented in Table 3 for the overall models and Tables 4-6 for regional models. Overall Analysis

The results of estimation for the overall sample are shown for the two periods (Table 3). The chi-square scores of models for both periods indicate that the models are significant overall. About 75% of foreign investment decisions in both periods can be correctly predicted by our models.


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The impact of market size of the host country (GDP) on foreign investment of service MNEs is found to be positive and significant for both periods. This confirms the findings of previous empirical studies in single service industries (e.g., Terpstra & Yu [1988], in advertising). The results highlight the similar market-seeking behavior of service MNEs and manufacturing firms. The cultural distance (CD) between the home and host countries is found to have a negative impact on FDI of service MNEs in the first period. This result is consistent with studies of effects of cultural differences on foreign entry modes [Kogut & Singh 1988] and on failures of foreign subsidiaries [Li & Guisinger 1991]. We can also observe that the impact of cultural distance is much more pronounced in the early stage of internationalization. In the second period, the effect of cultural distance in the overall models disappears. The declining importance of the cultural variable may indicate a trend toward more homogenous markets in the triad regions. However, even in the second period, the cultural variable is still significant for FDI of Japanese service MNEs. Foreign investment of service MNEs is found to be positively related to the openness (OPEN) of the host country to the establishment of new foreign service subsidiaries in that industry. The effects are significant for both periods. The liberalization in national restrictions on inward FDI during the early 1980s [UNCTC 1988] has certainly shown a significant impact on international involvements of service MNEs. Foreign investment of service MNEs is also found to be positively related to the international competitiveness (ICI) of the service industry in the home country. The effect is consistent for both periods, but intensifies in the second period. This suggests the importance of home country industrialbases in internationalcompetition. Another possible reason, however, is the measurement of the competitiveness index. Because we did not adjustfor the effects of government restrictions on the index for international competitiveness, the index may be biased upward for countries with higher degrees of government restrictions.Because countries liberalized their restrictionsin the early 1980s, the bias was reduced and the impact of national competitive advantages improves in the second period. The degree of global oligopolistic reaction has a positive and significant impact on foreign investment of service MNEs for both periods. Our results support the hypothesis that service MNEs follow their competitors (both domestic and intermational)in going abroad as a defensive strategy. This is consistent with findings of oligopolistic reactions in the internationalbehavior of manufacturing firms [Knickerbocker 1973; Flowers 1976; Graham 1978]. The continuing integration of world economy, the globalization of markets, and improving communications technology, all suggest that a firm must compete with a global strategy [Hout, Porter & Rudden 1982]. As in the case of manufacturing firms, the growth in the size of a service firm (GSIZE) has a positive and significant impact on foreign investment

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TABLE3 Determinants of Service Foreign Investment Logistic Regressions: Overall Models

Variable Intercept GDP

1976-1980 Model 1 Model 2

1980-1986 Model 1 Model 2

-3.3860*** (0.4000)

-3.3532*** (0.4191)

-3.6411 *** (0.3210)

0.8600***

0.1 900*

(0.1500)

FDI

(0.0930)

0.8780 (0.5350)

-0.6210 (0.3600)

0.3080 (0.2680) -0.1000 (0.0765)

CD

-0.3437** (0.1109)

-0.1584 (0.1130)

OPEN

0.6386*** (0.1421)

0.5139*** (0.1561)

IC,

0.4281 * (0.1951)

OLIGOP

GSIZE Chi-square D.F. Model p< Hit Ratio (%) Observations Firms

0.0787 (0.1896) 4.3333***

0.3420* (0.1650) 98.74 5 0.0001 74.8 684 158

-0.7138*** (0.1543)

0.3467 (0.2160) 2.7121 ***

(0.4763)

(0.4197)

0.4400** (0.1670)

0.1120* (0.0534)

116.96 4 0.0001 76.9 684 158

0.8578*** (0.1763)

195.96 7 0.0001 79.1 725 168

0.1040** (0.0387) 34.87 4 0.0001 62.4 725 168

*p