Abstract

Offshore schools are for-profit educational services designed to grant home government recognised high school diplomas to students in an overseas country. This paper takes the theoretical perspectives of institutions and transaction cost economics to investigate how offshore school multinational enterprises choose the entry mode in foreign direct investment. We create a dataset for offshore schools from developed English-speaking countries to provide supporting evidence. We find that resulting from stringent regulations on the education system by home country authorities, offshore school enterprises tend to choose the high control mode in the host country when the specificity of investments is high, particularly in feeder schools as the guaranteed parent university admission with an offshore school high school diploma. Our study provides theoretical implications on entry mode choices upon home country institutions, as well as temporal specificity of the feeder school investment.

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