Entry and Co‐operative Strategies in International Business Expansion

Citation

Whitelock, J. (2002), "Entry and Co‐operative Strategies in International Business Expansion", International Marketing Review, Vol. 19 No. 6, pp. 681-682. https://doi.org/10.1108/imr.2002.19.6.681.1

I came to this book expecting a discussion of the many market entry strategies available to businesses today. However, despite the title, that is not the focus of this book. Rather the author states he is concentrating on MNEs and foreign direct investment, attempting to answer the questions of where, when and what to do in this regard, as well as how to do it. It should also be said that the emphasis appears to be on American MNEs, as references to American legislation, the dollar value and the USA are made throughout. This will limit its interest outside the USA.

The book is written for “international executives … pursuing international market opportunities or want[ing] to do so and for scholars and students of international business or global management”. As such, the apparent failure to address exporting and non‐equity modes of co‐operation is disappointing. This wide audience also seems to make it difficult to decide what exactly the book is trying to do. For example, early chapters discuss alternative theories of international expansion, while later chapters provide guidelines to executives. I am not sure that this mix is workable.

The book is ordered in three sections: theoretical perspective of international expansion; entry strategies (i.e. FDI approaches); and co‐operative strategies (essentially equity joint ventures). In the first section, Luo aims to integrate the global strategy paradigm with major MNE theories because these are inadequately combined in the literature. This is a laudable aim and the discussion in Chapter 1 is useful and interesting. However, the presentation of details of worldwide FDI at the end of the chapter sits uneasily with this aim. Nevertheless, Luo does cover the major theories of international expansion – the dynamic capability perspective; the evolutionary perspective and the global integration perspective. This discussion is thorough and very relevant to students of international business and international marketing. However, I would caution against the view that “a global strategy is one in which standardised products are offered internationally and the competitive strategy is dictated by the home office” (p. 87). The long discussion over many years of the issue of product standardisation indicates that very few businesses, which would regard themselves as having a global strategy, offer a completely standardised product around the world. Luo seems to acknowledge this himself when he states “locating production in … foreign markets facilitates customer responsiveness and product differentiation” (p. 115, my italics).

Section 2, on entry strategies, considers location selection, entry mode selection, timing of entry and industry selection. Although Luo states he is concentrating on FDI, brief mention is given here to exporting, subcontracting, and countertrade. Luo also includes licensing and franchising as investment modes at this point (as well as branch offices abroad), an unusual description given that these methods are non‐equity co‐operative modes. In short, this highlights the need for it to be made clear at the outset exactly what the author’s definition of FDI is. At times, too, the writing is very specific – China is often used as an example – whilst elsewhere no examples are given to illustrate the points made. An example of an embryonic industry is given (p. 208), but there are no examples of growth, shakeout, mature or dying industries. This is inconsistent and unhelpful for the reader. In contrast, advising MNEs to invest in a growing industry seems somewhat obvious.

Section 3, on co‐operative strategies, covers partner selection, sharing arrangement and control, and joint venture negotiation, co‐operation and termination. This section is particularly useful to executives as it provides guidelines to activity and was well presented and discussed. However, it may be of limited use to students and scholars.

Some specific comments also need to be made. Luo comments that in China MNEs have now moved away from joint ventures to wholly owned subsidiaries as a result of the exploratory learning they have undertaken in the former (p. 30). However, later he comments that changes in the regulations regarding FDI in China have been influential in this shift. Some errors are also inexcusable – despite being published in 1999, the writer refers to 12 members of the EU – and referencing to source material seems inconsistent and sporadic. Finally, as a general comment, a chapter summary would have helped the reader. Similarly, a conclusion chapter was needed. In sum, different audiences will find different aspects of the book of interest and the right approach may well be to dip into those sections which are most relevant to the individual reader.