Reviving Traditions in Research on International Market Entry

Citation

Joseph, S. (2005), "Reviving Traditions in Research on International Market Entry", International Marketing Review, Vol. 22 No. 4, pp. 474-476. https://doi.org/10.1108/02651330510608479

As the global village expands and trade barriers fall worldwide, the notion of international trade and worldwide business integration becomes more and more commonplace for all manufacturers. However, a continuing concern for multinational corporations (MNC) and small exporters alike is the issue of market entry. Inevitably questions and concerns arise as to what is the best form, when is the best time, and what are the political, legal, cultural and other pitfalls that one has to look out for. The resulting platform is a rich feeding ground for academic research and exploration into the intricacies and complexities that make international business such a challenging undertaking.

This book explores not only some traditional issues in market entry, such as MNC control, and the ins and outs of cross‐cultural business relationships, but also non‐traditional issues, such as the emergence of gray markets, first‐hand information on patents and other intellectual copyright issues in China, as well as, the pros and cons of counter trade agreements between MNCs and developing countries.

The book is introduced by Professor Tiger Li, who sets the stage for an exciting discussion of new and interesting perspectives on market entry and international trade. Offering a short introduction on each of the various topics explored, Li establishes what the various topics entail and why these pieces offer significant contributions to the marketing literature. The first paper, by Saeed Samiee, presents an intriguing review of the issues relevant to counter trade (CT) transactions. Samiee initially argues against using CT altogether in a business environment, pointing out the limited benefits of such an agreement to developed world MNCs. Specifically, he criticizes existing literature that paints a favourable picture of CT, offering instead a more detailed analysis of the many pitfalls, inconveniences and losses that MNCs experience once they engage in this practice. However, despite the overall gray outlook, the author also notes some of the potential benefits of CT transactions, and overall gives an extensive account of all the issues potential marketers need to explore if and when considering CT with clients in developing countries. The paper could benefit from considering the perspective of governments who are involved in CT transactions with MNCs. Similarly, several developing nations do significant deals among themselves in CT and have very favorable results (Vitikiotis and Murphy, 2003).

The second paper written by Zou et al. discusses MNC control over foreign market ventures. This is a short but informative piece as to the role governments have in the entry mode chosen and level of control exhibited by MNCs operating within their borders. The authors aptly discuss a number of issues MNCs need to consider when choosing an entry option and illustrate via path analysis, the importance of understanding existing government policies and practices prior to commencing negotiations. The paper discusses how aggressive measures to attract foreign business, as well as, internal policies to stimulate local involvement in these ventures, in turn shape government policy as it relates to foreign equity and inevitably foreign control in an investment venture. The authors offer valuable discussion on the role of host governments in both operating control, as well as, entry mode for MNCs. However, they might have offered future recommendations in this area, as well as, possible theories on how MNCs want to address negotiations with host governments who may be either highly interested in attracting foreign investments or have specific ideas as to the equity level expected between local and foreign entities.

The third paper by Li and Li deals with the issue of channel integration in new product export. The authors offer a convincing argument for explicitly exploring the issue of new products as opposed to service or existing mature products. They examine the role of organizational capability as it pertains to asset specificity: “The extent to which specialized investments and skills are needed to support a transaction,” p. 55 when introducing new products into a foreign market. A compelling model is presented of the relationships surrounding asset specificity, country risk and firm size as they pertain to new products exported abroad, highlighting the resulting impact on channel integration, product competitive advantage and product market performance.

In the fourth paper by Mullen Sashi and Doney, the authors offer a unique perspective on the development of gray markets in international trade. A case study outlines in a very clear and simple manner the intricate complexities of gray market developments under the noses of manufactures and authorized distributors. The paper deals with some of the issues manufacturers face when a gray market develops while they have an exclusive relationship with an authorized dealer in that foreign market. As outlined by Li in his introduction; gray markets are an increasing concern for several industries, and extant research in this area is sparse, mainly because of the unwillingness of manufacturers and distributors to discuss the undercurrents of the phenomenon. The case study offers an inside perspective on not only how gray markets emerge but also why many manufactures and distributors are handicapped to do anything about it. This is my favorite discussion in the text and offers some interesting insight into what is becoming a common problem for many exporters especially when there are significant differences in pricing, extensive opportunistic behavior by marketing intermediaries and exchange rate fluctuations.

Academics have argued that corporations cannot truly call themselves global until they have a presence in China (Shapiro et al., 1991). As such, the significance of the next paper to both practitioners and academics alike is evident as it addresses patent issues in China; a concern for most MNC trying to do business in the Chinese market. In their paper Kopp and Zeng offer insightful information not only about past practices and misconceptions as they relate to patent protection in China, but address current changes in the laws and offer critical advice to MNCs and manufacturers as to cultural, political and legal practices regarding patent filing and challenging. The paper specifically relates these dynamics in the context of entering the Chinese market and offers valuable advice on specific precautions MNCs should take prior to entering China or initiating negotiations with Chinese firms.

The next paper also examines business transactions between China and the US, this time focusing on building strategic partnerships between MNCs and their Chinese counterparts. The difference between this paper and several other papers in the literature that address the cultural exchange that is presently underway, is a valiant attempt to present a 360° perspective where the viewpoint is not only confined to either that of Chinese executives or American executives, but rather a more holistic approach is offered where both Chinese and American executives are asked the same questions and both viewpoints are examined and discussed. The authors: Chao, Mockler and Dologite, offer a rare insider view into the intricacies of building strategic relationships between MNCs and local Chinese entities. The paper offers explanations as to what Chinese firms and their MNC partners consider important from a strategic perspective, when building these relationships and discusses specifically what foreign direct investment conditions are considered optimal, their initial reasons for establishing the strategic partnership between the two bodies, as well as, what considerations are paramount in the selection of strategic partners.

The final paper discusses long‐term relationships in Cross Cultural Business. The paper is written by Cortes and Vasquez‐Parraga, who offer an interesting perspective on the factors that contribute or detract from, successful international business encounters. Taking a very cultural perspective, the authors explore communication misnomers and pitfalls often encountered by business executives doing business in a foreign environment.

Overall the book covers topics that are both timely and relevant, offering a contribution that is significant to the literature. The issues are explained in a balanced manner, with input from both sides. Ultimately, the various authors address not only areas that are lacking in mainstream literature but do a good job of introducing their relevance to the field of international marketing research.