Factors Affecting the Choice of Greenfield FDI and Joint Venture Made by International Microelectronics Companies in Developing Markets by the Example of AT&S and Applied Engineering, Inc. in Malaysia

In this paper we analyzed the determinants influencing International Microelectronics Companies (in specific AT&S and Applied Engineering) in their strategic choice of entry mode towards developing markets, with a particular focus on Malaysia. Our analysis aimed at identifying specific factors that drive the popularity of greenfield FDI and Joint Ventures towards developing markets in the Industry. The literature review facilitated the process of mapping and prioritizing the determinants, while our industry and statistical analysis along with the case studies allowed us to test the validity of previous research and of the four dimensions we analyzed. The findings of our research show that primary considerations companies have when entering a foreign market in the microelectronics industry are to maintain strict and exclusive control over foreign operations for market leaders and to to develop new capabilities and pool resources for smaller companies. Moreover, financial disbursements, while at its highest, can be mitigated by several other internal and external factors (such as managerial capabilities, company’s network and government’s incentive and support). Similarly the required time to start from scratch new operations seems to lose relevance thanks to governmental support and managerial experience, which speed up operational processes and open the way for new network building. In an industry such as the microelectronics one, amid growing environmental concerns, resource constraints and increasing innovation speed, both Joint Ventures and Greenfield FDI represent valuable resources for companies, depending on their strategic motivation. Understanding which are those risks and constraints and how they impact companies choices, is the first step to gather the right set of tools to mitigate them and ensure that companies’ objectives are met.