Over the medium-term, TNCs plan to expand their operations abroad, especially through foreign sales and exports. Among the preferred modes of entry in foreign markets, cross-border mergers and acquisitions are gaining importance.
This year’s WIPS confirms TNCs’ preferences on the ways TNCs enter foreign markets, with non-equity modes (NEM) the least preferred. Similar to last year’s results, in 2014, only 19 per cent (a percentage still higher than last year’s) of TNCs executives considered them important in 2013, and 24 per cent foresaw that they would be relevant in 2016 (figure 6). This compares with percentages above 30 per cent just a couple of years ago. Lower interest in NEMs might be related to recent re-shoring trends and their underlying factors: favorable production conditions in developed economies and rising production and management costs in 2 distant overseas markets. On the other hand, this could also signal better conditions for equity modes. In fact, after a difficult year on the equity markets, the importance of M&As seems to have recovered, as almost 30 per cent of respondents considered M&As an important mode of entry in 2013, and this increases to 38 per cent of respondents who considered M&As to be important by 2016. Greenfield and brownfield investments maintained their relevance in TNCs’ internationalization strategies with 30−40 per cent of TNCs rating them as important; however, both modes lost some ground in importance compared with previous years when these percentages were about 5 to 10 points higher. Nevertheless, greenfield investments, as in the case of M&As, are set to grow. On the other hand, brownfield projects are expected to remain constant between 2013 and 2016. Similar to last year’s results, exports seem to be the most preferred mode of entry, selected by 40 per cent of respondents as important in 2013 and set to increase in the following years.