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Article
Publication date: 1 March 2021

Martina Battisti, Joanna Scott-Kennel and David Deakins

Integrating network attributes from studies of social networks, business relationships and small- to medium-sized enterprise (SME) internationalization, this study adopts…

Abstract

Purpose

Integrating network attributes from studies of social networks, business relationships and small- to medium-sized enterprise (SME) internationalization, this study adopts a perceptual view of a firm’s focal “net” of relationships to examine foreign market entry mode choice. This study aims to examine how the interaction between knowledge-intensive service (KIS) firm’s network ties, embeddedness and position is related to choice of mode and subsequently the firm’s perceived insidership status within its focal net.

Design/methodology/approach

This research is based on qualitative interviews with 25 small- to medium-sized KIS firms engaged in direct exporting or foreign direct investment (FDI). This study derives an empirically grounded framework of four distinct network patterns of these KIS firms through an iterative process of triangulation between cases and theory.

Findings

The four network patterns illustrate the complex interaction between network attributes and entry mode choice by KIS firms. The findings suggest formal ties and centrality in closed network relationships provide the “central controller” firm discretion over their entry mode choice. Resource-intensive FDI by “opportunistic investors” proved essential to securing centrality through formal, institutional ties. Less optimal patterns lacking institutional ties and centrality, however, precluded choice of FDI by “specialized exporters” and “client followers.” The study finds that entry modes are less likely to be influenced by the firm’s embeddedness in open or closed network relationships, but rather by the desire to achieve a more central network position and legitimacy through more formal, less imitable ties.

Research limitations/implications

The findings demonstrate the importance of network structure, a position of centrality, and strength of professional and institutional ties to small KIS firm internationalization. By adopting a more finely grained examination of the interaction between key attributes of the firm’s focal net, this study provides a valuable first step in conceptualizing the complexities associated with networking and adoption of export/investment internationalization modes.

Practical implications

There are a number of implications for the strategic and operational facets of smaller KIS firm internationalization. To avoid excessive network liability for resource-deficient SMEs, practitioners should consider network positioning as a strategic activity, with the costs associated with building and maintaining networks offset against economic- and resource-related returns.

Originality/value

The authors contribute to a better understanding of entry mode choices of KIS by taking a network perspective that accounts for the combined effects of different network attributes. The four network patterns identified extend current theoretical knowledge on the role of networks for entry mode choices of small KIS by highlighting that entry mode choices reflect the particular firm’s focal net and its attempt to achieve insidership status through high centrality and formal ties.

Details

European Journal of Marketing, vol. 55 no. 7
Type: Research Article
ISSN: 0309-0566

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Article
Publication date: 11 April 2016

Katharina Laufs, Michael Bembom and Christian Schwens

Using arguments from the upper echelons perspective this paper aims to examine the impact of CEO characteristics on small and medium-sized enterprises’ (SMEs’) equity…

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4278

Abstract

Purpose

Using arguments from the upper echelons perspective this paper aims to examine the impact of CEO characteristics on small and medium-sized enterprises’ (SMEs’) equity foreign market entry mode choice and how these associations are jointly moderated by geographic experience of the firm and host-country political risk.

Design/methodology/approach

The empirical analysis draws on data gathered from German SMEs testing triple-interaction effects between CEO’s age, firm tenure and international experience, geographic experience of the firm (organizational level), and host-country political risk (environmental level).

Findings

Empirical findings validate that the influence of CEO’s age and firm tenure on SME foreign market entry mode choice varies by managers’ level of managerial discretion (i.e. latitude of action) as determined by the SME’s geographic experience and the level of political risks prevailing in the foreign market.

Practical implications

Empirical findings help SME owners and managers to understand how CEO’s age and firm tenure are related with individual’s risk-taking behavior and information-processing demands and how these contingencies vary by the context in which the individual CEO is nested.

Originality/value

This study contributes to the growing body of literature focussing on SME foreign market entry mode choice by emphasizing the important role of CEOs in the decision to internationalize. More specific, this study contributes by an examination of the interactive effect of CEO’s age, firm tenure and international experience, geographic experience of the firm and host-country political risk and, therefore, emphasizes the context and boundary conditions under which the association between CEO characteristics and foreign market entry mode choice is more or less pronounced.

Details

International Marketing Review, vol. 33 no. 2
Type: Research Article
ISSN: 0265-1335

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Article
Publication date: 19 October 2012

Shaista Nisar, Agyenim Boateng, Junjie Wu and Mary Leung

What drives small to medium‐sized enterprises’ (SMEs’) internationalisation strategy remains a significant issue in international business research, despite the huge…

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5648

Abstract

Purpose

What drives small to medium‐sized enterprises’ (SMEs’) internationalisation strategy remains a significant issue in international business research, despite the huge research efforts on this subject over the past three decades. The purpose of this paper is to investigate and compare the motives behind the equity modes of foreign market entry in Norway.

Design/methodology/approach

Employing a cross sectional survey, a sample of 146 firms consisting of 42 international equity joint ventures (IJVs), 53 cross‐border mergers & acquisitions (CBM&As) and 51 wholly owned subsidiaries (FWOS) from Norway was collected and analysed.

Findings

It was found that whereas market development and power influence the choice of IJVs and CBM&As, the need to access resources and control resources appear to be the most important motives behind FWOS as an entry mode choice. Moreover, the regression results indicate that market development and power, technology development, location advantage and synergistic gains appear to have a significant bearing on different entry mode choice in Norway.

Research limitations/implications

The paper examines the motivation for the choice of foreign entry mode from the point of view of senior managers in Norway. Future research should accommodate multiple perspectives simultaneously from the parent companies and subsidiaries in a single paper to significantly advance the field.

Practical implications

The paper discovers that the motives behind the choice of cooperative modes of entry tend to be more linked with market development, technological development while FWOS are motivated by the need to control proprietary resources. The implication for the Norwegian government is that its financial incentives do not affect the mode choice of entry.

Original/value

The paper finds that different motives and theories influence the choice of foreign market entry by SMEs in Norway and provides insights for senior managers on the factors taken into account in making choice decisions in Norway.

Details

Marketing Intelligence & Planning, vol. 30 no. 7
Type: Research Article
ISSN: 0263-4503

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Article
Publication date: 8 May 2007

Yi Zhang, Zigang Zhang and Zhixue Liu

This paper seeks to challenge the traditional wisdom that sheds light upon sequential entry modes in developed countries by exploring the dynamic entry mode choice in…

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10915

Abstract

Purpose

This paper seeks to challenge the traditional wisdom that sheds light upon sequential entry modes in developed countries by exploring the dynamic entry mode choice in sequential foreign direct investment (FDI) in emerging economies.

Design/methodology/approach

A review of the literature on the entry mode choice is undertaken. Based on analysing two related theories consisting of the knowledge‐based theory of the firm and organizational learning theory, entry mode choices in sequential FDI in emerging economies are investigated using both an internationalisation process model and the capability‐developing perspective, and exclusive propositions are put forward accordingly. Then, these propositions are tested on the context of China with the methodology of paired‐samples t‐tests.

Findings

Based on macro‐level longitudinal data in China from 1979 to 2005, the choice of entry mode in sequential FDI in emerging economies is inconsistent with the capability‐developing theory of the firm, but is consistent with the international process model.

Practical implications

This study provides four practical implications. First, managers intending to invest abroad need to consider the cost and return of a specific entry mode. Second, knowledge about host markets has a more important effect on entry mode choice in emerging markets than MNCs' internal organizational capabilities. Third, MNCs adopt sequential investment in emerging economies, in which they adopt joint ventures in earlier entries and then shift to green‐field investment in later entries. Fourth, experiential learning, which consists of learning about host markets and local partners' skills, is emphasized in sequentially entering emerging markets.

Originality/value

This paper expands the research scope of previous studies that either explore a static choice of entry mode in foreign markets or only examine the entry mode choice in sequential FDI in developed countries. Taking into consideration the dynamic choice of entry modes, the paper studies sequential FDI in emerging economies, which throws light upon theoretical analysis of sequential FDI in China, and which has practical implications for foreign firms that are interested in China and planning to enter China's markets.

Details

Management Decision, vol. 45 no. 4
Type: Research Article
ISSN: 0025-1747

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Book part
Publication date: 24 June 2015

Michael Hilb

This paper introduces a conceptual framework to assess the foreign market entry behavior of emerging market multinationals (EMMs). By introducing strategic cognition as…

Abstract

This paper introduces a conceptual framework to assess the foreign market entry behavior of emerging market multinationals (EMMs). By introducing strategic cognition as the underlying theoretical perspective, this paper postulates that different levels of institutional voids in home markets shape the strategic cognition of EMMs, influencing their market entry behavior due to the prevalence of organizational imprinting in the early stages of internationalization. The paper aims to contribute to the strategic cognition literature by introducing emerging markets as a relevant context in which to apply and extend current thinking. Additionally, it aims to contribute to the institutional voids literature by providing a cognitive framework of behavioral patterns that is rationalized by institutional voids. Finally, the paper contributes to the entry mode literature by proposing strategic cognition as a relevant moderator for foreign entry mode choices, particularly those of EMMs.

Details

Emerging Economies and Multinational Enterprises
Type: Book
ISBN: 978-1-78441-740-6

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Article
Publication date: 18 November 2013

Hatem El-Gohary, David Edwards, Riyad Eid and Juanling Huang

The purpose of this paper is to add to the accumulative knowledge in the field through investigating the different factors affecting the choice of export entry mode by…

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2016

Abstract

Purpose

The purpose of this paper is to add to the accumulative knowledge in the field through investigating the different factors affecting the choice of export entry mode by Egyptian SMEs. An organised examination of the literature related to export entry modes by SMEs is discussed to provide and develop a clear understanding about the different factors affecting the choice of export entry mode by Egyptian SMEs. Such investigation will help in achieving a deep and reflective understanding of current exporting practises by Egyptian SMEs. The findings indicated that there is very few research studies in the literature related to the choice of export entry mode in developing countries in general and there was no published studies related to the choice of export entry mode in Egypt.

Design/methodology/approach

The paper reviews the published literature related to choice of export entry mode by SMEs in general and to SMEs in developing countries (e.g. Egypt) in particular. Based on this review and the results of two focus groups, the paper validates a conceptual model utilising a positivist research philosophy with a quantitative approach, in which quantitative data are collected based on survey strategy through questionnaires to address different levels of the study.

Findings

The findings showed that Egyptian SMEs owners, marketing and sales managers have a limited knowledge in relation to the different available export entry modes. The findings also illustrated that SME internal factors, local market factors and target market factors have different impacts on the choice of export entry mode and that only small number of Egyptian SMEs conducted an effective and efficient export activities.

Research limitations/implications

The paper will provide great benefits for entrepreneurs, policy makers, practitioners, researchers and educators though providing a clearer view and deep understanding for the issues related to different factors affecting the choice of export entry mode by Egyptian SMEs.

Originality/value

The paper adds to the extremely limited number of empirical studies that has been conducted to investigate different factors affecting the choice of export entry mode by Egyptian and Developing Economies SMEs. Depending on this research, researchers and scholars in the field can have a clearer view to set their attitude towards suitable future research studies which in turn will contribute to the related accumulated knowledge in the field.

Details

Journal of Economic and Administrative Sciences, vol. 29 no. 2
Type: Research Article
ISSN: 1026-4116

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Article
Publication date: 16 February 2010

Romdhane Khemakhem

Managers involved with export marketing are concerned first with entry mode decisions for their foreign expansions. The purpose of this paper is to examine the key factors…

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3406

Abstract

Purpose

Managers involved with export marketing are concerned first with entry mode decisions for their foreign expansions. The purpose of this paper is to examine the key factors that influence the exporting firm's foreign market entry mode choice. It aims to test empirically the hypothesized relation between three kinds of determinants – i.e. transaction costs, export behavior, and channel environment – and the likelihood of selecting an integrated as opposed to an independent mode.

Design/methodology/approach

Through an analytical review, research hypotheses were built. An empirical investigation was carried out among 420 exporting firms, which were surveyed to explore the determinants of their entry mode choice decision. Exploratory factor analysis and confirmatory factor analysis are employed to extract and test key influential factors on the basis of the data of this sample. Then, logistic regression models are used to determine the likelihood relationships between the exporting mode and the declined variables.

Findings

The results show that not all constructs hypothesized with the entry mode relationship were introduced into the model, and only three variables were retained that were significant in predicting the entry mode choice: two transaction costs variables and one export behavior variable. None of the channel environment variables was maintained by the main effects model; they constituted only pure moderators of the relationship between the transaction costs factors and the entry mode choice decision.

Research limitations/implications

Although probably classified within the category of classical research, the paper can easily contribute to the current literature in more than one way. But the research does contain certain limitations, mainly with sampling procedures. The main limitation is that the sample was one of convenience and did not respect the heterogeneous character of the subjects, with the result that the different empirical tests are not easily generalizable.

Practical implications

This research should help managers to identify some of the circumstances under which direct exporting modes might be deployed to enhance international marketing performance in foreign markets. Direct exporting should be considered in the area of small and medium‐sized exporting firms at the outside of a new industrialized economy. It might be concerned within an adaptive marketing approach where the environment pressures have only moderating effects.

Originality/value

The paper offers interesting insight into the decision tools in international marketing. Principally, the empirical study makes a major contribution to the limited body of empirical knowledge on entry mode choice for the exporting activities of small and medium‐sized enterprises in the context of an emerging economy. It points out the fundamental value of the transaction costs approach and verifies the theoretical assumptions of the moderating effects of the environment variables.

Details

European Journal of Marketing, vol. 44 no. 1/2
Type: Research Article
ISSN: 0309-0566

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Article
Publication date: 26 September 2008

Yung‐Ming Cheng

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…

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1665

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.

Details

International Journal of Commerce and Management, vol. 18 no. 3
Type: Research Article
ISSN: 1056-9219

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Article
Publication date: 28 October 2013

Kalanit Efrat and Aviv Shoham

Entry modes are a central aspect of international business, particularly for young firms lacking organizational experience and capital, such as born global (BG) firms. Few…

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3155

Abstract

Purpose

Entry modes are a central aspect of international business, particularly for young firms lacking organizational experience and capital, such as born global (BG) firms. Few studies on BG internationalization have addressed the antecedents to entry mode decisions in BG firms. Based on the two main groups of factors impacting entry mode decisions in general, namely environmental (external) conditions and firms’ strategic characteristics, the purpose of this paper is to explore how the interaction between country and market factors and BGs’ strategic orientation affects BGs’ choice of low- vs high-commitment entry modes.

Design/methodology/approach

Data from 104 Israeli high-tech BG firms were gathered in field interviews with managers. Preliminary analyses assessed non-response bias.

Findings

Most BGs showed a strong Prospector orientation manifested by exploration and exploitation of opportunities. This in turn moderated the impact of several host market factors on the choice of entry mode, encouraging BGs to choose high-commitment entry modes.

Practical implications

Contrary to earlier research claiming that BGs minimize risk by choosing low-commitment entry modes, the findings show that BGs’ choice of commitment level is affected by host market characteristics.

Originality/value

It is often thought that BGs’ choice of entry mode is decisively affected by the host market risk profile, encouraging the choice of low-commitment entry modes in riskier markets. As the findings show, however, BGs are also sensitive to the opportunities provided by the host market, sometimes resulting in high-commitment entry modes.

Details

International Marketing Review, vol. 30 no. 6
Type: Research Article
ISSN: 0265-1335

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Article
Publication date: 25 May 2020

Ann Sophie K. Loehde, Andrea Calabrò, Mariateresa Torchia and Sascha Kraus

The aim of this study is to advance knowledge on family firms' entry mode choices by examining the linkage between target market context, especially in the emerging…

Abstract

Purpose

The aim of this study is to advance knowledge on family firms' entry mode choices by examining the linkage between target market context, especially in the emerging economies of China and India, and the dominant family firm logic of keeping ownership and control in the family.

Design/methodology/approach

We use an exploratory multiple case study analysis approach based on nine German family firms' internationalization endeavors. We use both primary and secondary data.

Findings

Traditionally, extant research concludes that family principals prefer foreign direct investments (FDIs) in order to exert maximum control when entering international markets. In contrast, our study finds a clear preference for international joint ventures (IJVs) as an initial entry mode of choice into unfamiliar markets. Our findings propose this decision to be rooted in cultural unfamiliarity and the complexity of the target markets' legal environment. The effect of these two factors is amplified by prior IJVs experiences.

Originality/value

This article offers several original insights. First, we identify the triggers of the paradoxical IJVs’ entry mode choice among family firms and thus explain the motivation for breaking with the dominant family firm logic of maximizing control. Second, we account for factors in China's and India's particular emerging market environments. In the light of family control, the unfamiliarity with these markets triggers the decision to compensate for the high level of uncertainty by engaging in an IJV partnership. Third, our study shows that family firms are indeed willing to share control if it serves the long-term survival of the firm.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 26 no. 6
Type: Research Article
ISSN: 1355-2554

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