Asset specificity, experience, capability, host government intervention, and ownership‐based entry mode strategy for SMEs in international markets
International Journal of Commerce and Management
ISSN: 1056-9219
Article publication date: 26 September 2008
Abstract
Purpose
The purpose of this paper is to propose an integrated theoretical framework to examine the determinants of the choice of ownership‐based entry mode strategy for small to medium‐sized enterprises (SMEs) in international markets.
Design/methodology/approach
The statistical data sources were mail survey and secondary data collection. Logistic regression was used in the testing of the hypotheses.
Findings
All four theoretical views (including transaction cost theory, the views of Uppsala process model, organizational capability perspective, and bargaining power theory) have relevance for the choice of SMEs' ownership‐based entry mode strategy in international markets.
Research limitations/implications
This study was limited to the manufacturing sector only. Given the limited scope, caution must be exercised in generalizing from this study's sample to firms in the service sector. Furthermore, this study is a cross‐sectional analysis and may not draw a complete picture of the course of SMEs' ownership‐based entry mode choice over time. Future research should use longitudinal analysis to explore the evolution of SMEs' international expansion over time.
Practical implications
This study proposes a decision path diagram that can give the SMEs some suggestions about how they should consider their choice of ownership‐based entry mode strategy in international markets. The executives of SMEs that invest in international markets can draw useful lessons from this study.
Originality/value
This study proposes a well‐rounded theoretical framework based on four theoretical views (including transaction cost theory, the views of Uppsala process model, organizational capability perspective, and bargaining power theory) to examine SMEs' choice of ownership‐based entry mode strategy in international markets. The limitations for past research that are inherent in focusing on a single theoretical view can be overcome.
Keywords
Citation
Cheng, Y. (2008), "Asset specificity, experience, capability, host government intervention, and ownership‐based entry mode strategy for SMEs in international markets", International Journal of Commerce and Management, Vol. 18 No. 3, pp. 207-233. https://doi.org/10.1108/10569210810907146
Publisher
:Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited