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Presumably, any researcher within business economics will approve of the practical use of theory; if only because this brings the economy closer to the ideal Pareto optimum. Conceiving economic theories as evolving according to a sequential pattern with stages of increasing sophistication, the much-coveted (but not always obtainable) ultimate stage is that of a theory which can improve business practice, in other words a normative theory.

Following recent empirical studies, we consider the research on the firm's choice of international investment mode as being on the threshold of a normative stage. However, some adjustments to the present modal choice research are needed for the metamorphosis into a normative theory which holds the potential of improving business practice. In this chapter, we will elucidate requisite adjustments for such a normative theory; but, first, a brief outline of the development of the entry mode research is in order (on the ensuing pages we will use the terms “modal choice"," entry mode" and" international investment mode" interchangeably.