Determinants of foreign entry strategies in Greek food industry

This article concerns aspects of internationalization and market servicing modes in the Greek food industry. During the late 1980s, foreign direct investment into the Greek food industry increased to around US $80 million per year from below US $10 million in the early 1980s and sales arising from accumulated FDI inflows (called here subsidiary sales, i.e., sales by subsidiaries of multinational enterprises) became an important mode for servicing sales in Greece by foreign companies. Sales arising from licensing grew but were relatively less important except in the oils and fats sector of the food industry, whereas the contribution of imports declined. The present study examines the determinants of the shares of subsidiary sales and licensed sales in total production separately for eight three-digit food subsectors of the Greek food industry for 6 years, using the Tobit model with fixed effects to account for the limited nature of the dependent variable. Ownership advantages, proxied by variables to represent marketing and technological intensity, and internalization conditions, proxied by a variable to represent transactions costs, are shown to be important determinants of the subsidiary sales share. The licensing sales share is high in subsectors where technological competition is advanced but transactions costs are low. © 1998 John Wiley & Sons, Inc.