~ ) Pergamon 0969-5931(96)00019-4 International Business Review VoJ. 5, No. 4, pp. ? 77-394, 1996 Copyright © 1996 Elsevier Science Ltd Printed in Great Britain. All rights reserved 0969-5931/96 $15.00 +0.00 Dunning's Eclectic Theory and the Smaller Firm: the Impact of Ownership and Locational Advantages on the Choice of Entry-modes in the Computer Software Industry Keith D. Brouthers,* Lance Eliot Broutherst and Steve Werner$ *East London Business School, University of East London, Longbridge Road, Dagenham, Essex RM8 2AS, UK t University of Texas at San Antonio, College of Business, Division of Management and Marketing, San Antonio, TX 78249, USA ~.Department of Management, University of Houston, Houston, TX 77204, USA Abstract -- This paper set out to investigate the entry-mode selection activities of small- and medium-sized service firms. Based on Dunning's eclectic theory (1988, Journal of International Business Studies, Vol. 19, No. 1, pp. 1-31; 1993, Multinational Enterprises and the Global Economy, Addison-Wesley) and previous entry-mode research, the entry-mode selection activities of US computer software firms were examined. The findings tend to indicate that ownership and locational advantages influence the entry-mode choice of small- and medium-sized firms in a manner similar to that of larger firms. Additionally, this study confirms the applicability of the eclectic theory of foreign direct investment to a second sector of the services industry. Copyright © 1996 Elsevier Science Ltd Key Words -- Entry-mode, Software, Eclectic Theory, FDI. Dunning's Eclectic Theory Keith D. Brouthers (DBA -- US International University, San Diego) is a reader in strategic management at the East London Business School, University of East London. His research has been published in several journals including: Management International Review and Long Range Planning. Lance Eliot Brouthers (PhDs -- University of Florida and Florida State University) teaches courses in international business and strategy at the University of Texas at San Antonio. His research has been published in several journals including: The Journal of International Business Studies, Long Range Planning, International Business Review and Columbia Journal of World Business. Steve Werner (PhD University of Florida) is an assistant professor in the Department of Management at the University of Houston. He has published in: The Academy of Management Journal, The Journal of lnternational Business Studies, Journal of International Management, and Columbia Journal of World Business. All authors contributed equally to this paper and are listed in alphabetical order. All correspondence should be sent to Dr Keith Brouthers. 377