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Acquisitions or Joint Ventures: Foreign Market Entry Strategy of U.S. Advertising Agencies

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  • Jaemin Jung

Abstract

This article examines the preferred foreign entry mode and region of U.S.-based advertising agencies by analyzing all cross-border acquisitions and joint ventures completed from 1981 to 2001. In addition, based on the transaction cost theory, the impact of host country risk and cultural distance on the choice of entry mode was tested with a binomial logistic regression model. Although the frequency of acquisitions was approximately three times greater than that of joint ventures, U.S. agencies primarily set up joint ventures in the Asian countries. Two hypotheses depicting the environmental factors revealed significant results; that is, U.S. agencies preferred joint ventures to acquisitions when the host country is culturally more distant from the United States and politically, financially, or economically riskier. The results are of interest in understanding not only advertising agencies specifically but also useful in considering foreign entry strategy by all media companies.

Suggested Citation

  • Jaemin Jung, 2004. "Acquisitions or Joint Ventures: Foreign Market Entry Strategy of U.S. Advertising Agencies," Journal of Media Economics, Taylor & Francis Journals, vol. 17(1), pages 35-50.
    • Handle: RePEc:taf:jmedec:v:17:y:2004:i:1:p:35-50
    DOI: 10.1207/s15327736me1701_3
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    Cited by:

    1. Silk Alvin J. & Berndt Ernst R., 2004. "Holding Company Cost Economies in the Global Advertising and Marketing Services Business," Review of Marketing Science, De Gruyter, vol. 2(1), pages 1-51, June.
    2. Zengyu Huang & Xia Han & Frank Roche & John Cassidy, 2011. "The Dilemma Facing Strategic Choice of Entry Mode," Global Business Review, International Management Institute, vol. 12(2), pages 181-192, June.
    3. Ting Liu & Ye Huang, 2024. "The influence of subnational corruption on the conversion of foreign proprietorship: Stumbling block or lubricant? Evidence from Sino-foreign joint ventures," Asia Pacific Journal of Management, Springer, vol. 41(1), pages 135-170, March.
    4. Canabal, Anne & White III, George O., 2008. "Entry mode research: Past and future," International Business Review, Elsevier, vol. 17(3), pages 267-284, June.
    5. Burçak Polat, 2017. "FDI entry mode choice and ownership structure in Turkish market: A firm-level analysis," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1283762-128, January.
    6. Cleeve, Emmanuel A. & Debrah, Yaw & Yiheyis, Zelealem, 2015. "Human Capital and FDI Inflow: An Assessment of the African Case," World Development, Elsevier, vol. 74(C), pages 1-14.

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