The selection of mode of entering a foreign market is a key decision in a firm's internationalisation. Building on the resource-based view, this study examines important antecedents of firm's selection of a wholly-owned subsidiary and collaboration with other firms. Based on analysis of empirical data from Swedish manufacturing firms operating on several foreign markets the study found that: 1) greatermarket orientation (MO) and entrepreneurial orientation (EO) capabilities favour firm's selection of a wholly-owned subsidiary; 2) greater institutional distance between the domestic market and the foreign market favours collaboration with local firms; 3) an entry mode that is aligned with the capabilities and institutional distance is positively associated with firm's performance on the foreignmarket after the entry phase. Contributions to literature are discussed. Copyright © 2015 Inderscience Enterprises Ltd.