*W. ChanKim is associateprofessorof strategyand international at management INSEAD.His researchandpublications focus on strategydesign for multinational and corporations economicandorganizational analysisof multinational enterprises. **PeterHwangis assistantprofessorof marketing BaruchCollege. His research at andpublications focus on market entryanddiversification strategyof multinational corporations. C.W.L.Hill, Sumantra Thanksto Renee A. Mauborgne, at Ghoshal,and the participants the annual International BusinessAssociationfor theircommentson an earlierdraft conferenceof the European Thanksalso to threeanonymous of this manuscript. reviewersfor theirhelpfulcomments. Received:September1989;Revised:May & October1990;Accepted:May 1991. 29
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JOURNAL OF INTERNATIONALBUSINESS STUDIES, FIRST QUARTER 1992
and Gatignon and Anderson  provide an excellent review and intecost withina transaction framework. grationof existing entrymode explanations factors and Notwithstandingthe centralrole environmental transaction-specific play in influencing multinationals' institutional mode choice, this paper makes a case directed towards establishing the importance of a third group of factors-global strategic considerations-in determiningthe foreign entry mode choice. Specifically, it is our contention that beyond the subsidiary it unit level considerationsalreadyestablishedin the literature, is also important to consider the role that the global strategic posture of a multinationalplays, namely the strategic relationship it envisages between its operations across borders, in reaching its entry mode decision. The theoretical heritage of our contention can be traced in part to the seminal work of Perlmutter which acknowledged the increasing existence of geocentric approachesto multinationalmanagement.The geocentric approach outlined by Perlmutterprovided a succinct explanation for the existence of and benefits attached to managing subsidiary units not as a portfolio of independent units but as an interdependentnetwork. The more recent foundation upon which our...