The effect of multi-level factors on MNEs' market entry success in a small emerging market

Abstract

Purpose

Whilst earlier studies of market entry success factors have mostly focused on large emerging markets such as China or India, limited attention has been given to smaller emerging markets. The purpose of this paper is to identify the effects of firm-level (i.e. entry mode and firm size), country-level (i.e. market potential, country risk and openness) and cultural distance on successful market entry strategies of multinational enterprises (MNEs) in a smaller emerging country (Thailand).

Design/methodology/approach

Using archival data from 1996-2008 and a survey of 139 firms, the results reveal significant influence of both market potential and cultural distance on successful market entry.

Findings

Overall, the findings demonstrate a cautionary approach when generalizing the results of studies focusing on large emerging markets to smaller emerging markets. Smaller emerging markets such as Thailand offer very different market-space than large emerging markets and therefore the overall determinants of success may differ substantially.

Practical implications

Market potential appears to be the most significant variable in entering the Thai market. The findings also suggest a negative and significant relationship between cultural distance and market success in Thailand. This reveals that foreign firms that enter small emerging markets which are culturally close to their home countries can enjoy a greater possibility of success.

Originality/value

This study is a first step towards sensitizing corporations and policy makers in understanding the differences in market entry success factors between larger and smaller emerging markets and strategizing accordingly.

Citation

J. Perks, K., P. Hogan, S. and Shukla, P. (2013), "The effect of multi-level factors on MNEs' market entry success in a small emerging market", Asia Pacific Journal of Marketing and Logistics, Vol. 25 No. 1, pp. 131-143. https://doi.org/10.1108/13555851311290975