Entry modes and national systems of innovation

Multinational enterprises (MNEs) have contributed to the productive and technological upgrading of many host economies, whereas discussion about entry modes and developmental effects is far from being concluded. We explore the relative importance of national systems of innovation in various forms of firm internationalization. We hypothesize that, adopting a dynamic perspective, institutional stability and the consolidation of R&D capacities reinforce entrepreneurship and become key driver mechanisms to improve the attraction of foreign entries. The empirical analysis is built upon a sample of countries with dissimilar levels of development using longitudinal data for the period 1998-2004. The findings confirm that the relative technological advance of host countries differ for cross-border mergers and acquisitions (M&A) compared to other entry modes, taking into account the diversity of the developing world, the potential of emerging economies and the need to investigate new drivers for the attraction of FDI. (C) 2010 Elsevier Inc. All rights reserved.