Adverse Selection and the Choice between Joint Ventures and Acquisitions: Evidence from Spanish Firms

We analyze the determinants of the choice between greenfield joint ventures, full acquisitions, and partial acquisitions in the internationalization expansion of a firm through foreign direct investments. Our results show that this choice is conditioned by transaction-cost factors (particularly the cultural distance between the home and host countries), as well as by the previous experience and internationalization path of the foreign investor, as suggested by the knowledge-based theories of the firm.