Modeling International Expansion

Strategy deals with decisions about the scope of the firm and related choices about how to compete in various businesses. As such, research in strategy entails the analysis of discrete choices that may not be independent of each other. In this paper, we review the methodological implications of modeling such choices and propose conditional, nested, mixed logit, and hazard rate models as solutions to the issues that arise from non-independence among strategic choices. We describe applications with an emphasis on international strategy, an area where firms face a multiplicity of choices with respect to both location and mode of entry. Strategy research addresses decisions about the allocation of resources for the purpose of developing and maintaining competitive advantage that enables superior corporate performance (Hofer & Schendel, 1978). It places emphasis on large, discrete moves such as the decision to enter (or withdraw from) a certain business, or the choice to undertake such investment via a given mode of governance. As a result, empirical samples may be obtained by observing any number of investments undertaken by a set of firms over time. However, for theoretical as well as measurement reasons, most Research Methodology in Strategy and Management, Volume 4, 103–119 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 1479-8387/doi:10.1016/S1479-8387(07)04005-2