Advantages of cross-border acquisition under international financial crisis

Abstract

During the global financial crisis, the volume of Chinese FDI is enlarging rapidly and acquisition has already been our major entry mode. To understand this phenomenon, we constructed a market entry game model for a multinational enterprise. The finds include: (1) The enterprise prefers green-field investment when its export cost rises; (2) green-field indeed is a credible threat for other enterprises in the target market even if it is not a desirable option when the effective demand decreases. Therefore, rising of export cost and decreasing of effective demand provide more negotiating power to acquire the target firm. © 2013 Springer-Verlag.