Entry Mode of MNEs in Vietnam: An Eclectic Model of The Choice Between International Joint Ventures and Wholly Owned Subsidiaries

Abstract:The purpose of this article is to analyze and explain foreign investors’ entry mode choices between Wholly Owned Subsidiaries (WOS) and International Joint-ven- tures (IJV). Research hypotheses have been established and verified over a sample of 6603 foreign firms who made investments in Vietnam during the period from 1988 to 2010. The results of the study were in agreement with the eclectic model (Dunning, 1980, 1995). We found the significant impact of almost of components of OLI advantages, in the exception of MNEs’ size and cultural distance. The results indicate that: “O” advantages such as (experience and asset specificity) are posi- tively associated with MNEs’ WOS choice, so negatively its IJV choice; “L” advan- tages such as investment risk, GDP growth and “I” advantages such as currency risk influence positively the MNEs’ IJV choice; so negatively its WOS choice.