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| Author: | Chatterjee, S. |
| Title: | Excess resources, utilization costs and mode of entry. |
| Journal: | Academy of Management Journal
1990 : DEC, VOL. 33:4, p. 780-800 |
| Index terms: | CAPITAL MARKETS MERGERS STRATEGIC MANAGEMENT DIVERSIFICATION |
| Language: | eng |
| Abstract: | The concepts of utilization costs, resource-based theories, and capital market imperfections are integrated into a new framework to explain how companies choose to enter new markets. Two modes of entry are considered: direct entry and acquisition. Factors are identified that help entrant firms choose the mode of entry that will minimize the cost of utilizing their excess resources in new markets. Employing current capital market theory and the assumption that information is asymmetric between firms and the capital market, the study demonstrates that utilization costs will differ for different types of resources for the two modes of entry. |
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