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1 – 10 of over 10000Contrary to the prevalent theory approaches that treat market selection and market entry mode selection as two related but essentially separate decisions, this paper argues that…
Abstract
Contrary to the prevalent theory approaches that treat market selection and market entry mode selection as two related but essentially separate decisions, this paper argues that these should most appropriately be looked on as two aspects of one decision process. It proposes that an exhaustive list of factors that can influence outcomes of such an integrated process be developed and argues that an inclusive spectrum of analysis would be able to accommodate all business contexts and most relevant business practice. It then presents a new market and market entry mode selection model (MEMS) which conforms to the proposed inclusive spectrum of the underlying decision process analysis.
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The decision on market entry mode, or how to enter a selected market, is of critical importance for international contractors' profit making and sustainable growth. Based on a…
Abstract
Purpose
The decision on market entry mode, or how to enter a selected market, is of critical importance for international contractors' profit making and sustainable growth. Based on a previous study, which successively identified ten basic entry modes specifically for international construction markets, this paper aims to focus on differentiating these entry modes in terms of organizational setting characteristics, compatibility, transferability, feasibility regarding different markets, and strategic effects so as to develop a systematic and comprehensive selection method for international construction market entry modes.
Design/methodology/approach
Market entry cases were collected through extensive archival analysis and interviews of practitioners. By a comparative analysis, how the entry modes differ by organizational setting characteristics is analyzed, and how they can be combined or sequenced to deliver a market entry process is empirically explored. The strategic effects which constitute the basis for selection among the entry modes and their combinations are identified, which include risk exposure, return, resource commitment, control, and flexibility.
Findings
How the basic entry modes can be combined and sequenced is mapped. The applicability of selected entry modes regarding 42 main country markets is reported. It is found that mobile entry modes and permanent entry modes differ in resource commitment, investment risk and strategic flexibility. Based on the results of the comparative case study, a process model for market entry mode selection is proposed.
Originality/value
The study provides theoretical implications for future studies to develop the market entry mode selection method. Practitioners can also obtain a better understanding of the relationship between the basic entry modes as well as the constraints and principles governing the selection between them.
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This paper goes above and beyond the prior research on entry mode by considering the organizational approach and examines entry mode selection between wholly-owned subsidiaries…
Abstract
Purpose
This paper goes above and beyond the prior research on entry mode by considering the organizational approach and examines entry mode selection between wholly-owned subsidiaries and joint venture by taking into account the existence of different types of joint ventures. In this way, this paper seeks to investigate whether or not a relationship exists between the first entry strategy decision of a particular firm and the prior foreign market entries made by other firms. Moreover, considering that foreign market entry is not a one-time decision, this study analyses whether or not prior entry in a particular country has influence on the choice of repeated entries in the same country.
Design/methodology/approach
This paper uses data of 1,470 subsidiaries established by Japanese electronics firms in 64 countries. The propositions are tested by applying a statistical t-test to compare the mean differences between the analyzed cases.
Findings
The findings revealed the legitimacy effect on the entry mode selection. Firms tend to follow the prior entry strategies of its rivals in the case of first time investors, while for subsequent investments, both prior entries made by the parent firm and competitors have great influence on the market access in a particular country. It suggests that the effect of market competition cannot be neglected when examining entry mode selection. Furthermore, there is a need to consider entry strategy as a dynamic rather than a static decision-making process.
Originality/value
The findings from this study are useful for scholars interested in advancing the knowledge on entry mode strategies of multinational companies.
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Heng Li, Zhigang Jin, Vera Li, Guiwen Liu and R.M. Skitmore
The purpose of this paper is to provide a new type of entry mode decision‐making model for construction enterprises involved in international business.
Abstract
Purpose
The purpose of this paper is to provide a new type of entry mode decision‐making model for construction enterprises involved in international business.
Design/methodology/approach
A hybrid method combining analytic hierarchy process (AHP) with preference ranking organization method for enrichment evaluations (PROMETHEE) is used to aid entry mode decisions. The AHP is used to decompose the entry mode problem into several dimensions and determine the weight of each criterion. In addition, PROMETHEE method is used to rank candidate entry modes and carry out sensitivity analyses.
Findings
The proposed decision‐making method is demonstrated to be a suitable approach to resolve the entry mode selection decision problem.
Practical implications
The research provides practitioners with a more systematic decision framework and a more precise decision method.
Originality/value
The paper sheds light on the further development of entry strategies for international construction markets. It not only introduces a new decision‐making model for entry mode decision making, but also provides a conceptual framework with five determinants for a construction company entry mode selection based on the unique properties of the construction industry.
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Most of the research studies on entry mode have been done through the lens of manufacturing firms from mature economic countries entering the Global South countries, and most of…
Abstract
Purpose
Most of the research studies on entry mode have been done through the lens of manufacturing firms from mature economic countries entering the Global South countries, and most of the related frameworks and theories have been developed to explain this perspective. This paper presents an understanding of entry mode strategies of services firms from the Global South countries entering into countries with mature economies by considering six software services firms in India entering the US market. The study develops a framework that incorporates multiple theories – both from an emerging economy perspective as well as a services perspective.
Design/methodology/approach
This study is exploratory in nature and focuses on the how and why aspects of strategic decisions. Qualitative research has traditionally been chosen when the main research objective is to improve understanding of a phenomenon. A multiple case study approach was used in this research. One of the key aspects of this study is the impact of different theories (institutional, network and other theories) on enterprises of different sizes. Therefore six cases – two each on small, medium and large enterprises – were selected.
Findings
Results identify addressable market size, cultural aspects, firm size, resource and service characteristics as dominating factors that influenced choice of entry modes. From a theoretical perspective, the author finds that theories such as transaction cost theory, eclectic paradigm and other popular theories associated with entry mode do not successfully explain the entry mode strategies for firms from the Global South. Strategic theory, such as resource-based view, motivation of a firm, have some application but do not explain, in isolation, all aspects of the entry mode choices.
Research limitations/implications
The study is an exploratory study and needs more data to validate the themes expressed in its conclusions. The study also focused on one industry and one country. Different industries within the same country may have different characteristics and may not follow the observations found in this study. Similarly, firms from other countries with similar economic characteristics may exhibit very different behavior. As a result, the themes that were expressed for software companies in India may not be generalizable across other industries and countries.
Originality/value
This study is significant for both academics and managers. For academics, the study addresses a significant gap in the literature. For managers, this study provides a framework for managers to evaluate and select the entry mode strategy that would be most effective in a successful expansion into foreign countries.
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In the associated paper “Selecting overseas markets and entry modes: two decision processes or one?”, it was proposed that market selection and market entry mode selection be…
Abstract
In the associated paper “Selecting overseas markets and entry modes: two decision processes or one?”, it was proposed that market selection and market entry mode selection be looked upon as two aspects of one decision process. Examines a wide spectrum of factor categories to be included in the proposed MEMS model and argues that an inclusive spectrum of analysis would make it a universally applicable model, capable of accommodating all business contexts and most relevant business practices.
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Dawna L. Rhoades and Paula L. Rechner
Shareholders are demanding that firms change their ownership and corporate governance structures to improve accountability and corporate performance. This study examined the…
Abstract
Shareholders are demanding that firms change their ownership and corporate governance structures to improve accountability and corporate performance. This study examined the influence of ownership and governance on entry mode selection, considered a key decision for international firms and one with important financial implications. Results indicate that owner control is related to the selection of higher risk and higher control forms of entry. Partial support was found for the effects of other governance mechanisms.
Hui Xu, Harry A. Taute, Paul Dishman and Jing Guo
The relationship between internationalization efforts of businesses and resulting performance has long been debated in the international marketing literature. Specially, under the…
Abstract
Purpose
The relationship between internationalization efforts of businesses and resulting performance has long been debated in the international marketing literature. Specially, under the environmental uncertainty, perception and experience of managers are important for internationalization performance.
Methodology/approach
This study proposes an integrated research framework and mechanism between perceived international risk and international marketing performance, adopting international experience as moderator variable and entry mode as mediating variable. Survey was conducted on 1,612 managers of 420 Chinese international enterprises by email and received 463 valid questionnaires.
Findings
The results show that there is a significant negative relationship between perceived international risk and international performance. Direct influence and perceived international risk have an indirect influence on international performance through entry mode; the influence on the international performance from perceived international risk is moderated by international experience, the regression coefficient between perceived international risk and international performance is the quadratic function of international experience.
Originality/value
Different from previous literature, this study found the complex relationship between risk and performance.
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Huiling Li, Wenya Yuan and Jianzhong Xu
This study aimed to identify a specific taxonomy of entry modes for international construction contractors and to develop a decision-making mechanism based on case-based reasoning…
Abstract
Purpose
This study aimed to identify a specific taxonomy of entry modes for international construction contractors and to develop a decision-making mechanism based on case-based reasoning (CBR) to facilitate the selection of the most suitable entry modes.
Design/methodology/approach
According to the experience orientation of the construction industry, a CBR entry mode decision model was established, and based on successful historical cases, a two-step refinement process was carried out to identify similar situations. Then the validity of the model is proved by case analysis.
Findings
This study identified an entry mode taxonomy for international construction contractors (ICCs) and explored their decision-making mechanisms. First, a two-dimension model of entry mode for ICCs was constructed from ownership and value chain dimensions; seven common ICC entry modes were identified and ranked according to market commitment. Secondly, this study reveals the impact mechanism of the ICC entry mode from two aspects: the external environment and enterprise characteristics. Accordingly, an entry mode decision model is established.
Practical implications
Firstly, sorting out the categories of entry mode in the construction field, which provide an entry mode list for ICCs to select. Secondly, revealing the impact mechanism of ICC entry mode, which proposes a systematic decision-making system for the selection of ICC entry mode. Thirdly, constructing a CBR entry mode decision-making model from an empirical perspective, which offers tool support and reduces transaction costs in the decision-making process.
Originality/value
The study on entry modes for ICCs is still in the preliminary exploratory stage. The authors investigate the entry mode categories and decision-making mechanisms for ICCs based on Uppsala internationalization process theory. It widens the applied scope of Uppsala and promotes cross-disciplinary integration. In addition, the authors creatively propose a two-stage retrieval mechanism in the CBR model, which considers the order of decision variables. It refines the influence path of the decision variables on ICCs' entry mode.
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Jie Yu, Changjun Yi and Huiyun Shen
This paper aims to study whether the adoption of an entry mode that fits the social trust level contributes to the improvement of foreign subsidiary performance.
Abstract
Purpose
This paper aims to study whether the adoption of an entry mode that fits the social trust level contributes to the improvement of foreign subsidiary performance.
Design/methodology/approach
The authors used the Probit model, linear regression, strategic fit approach and instrumental variable regression. The sample was made up of 11,095 observations of Chinese multinational enterprises' foreign subsidiaries in 54 countries from 2005 to 2020.
Findings
The results suggest that a host country with a high level of social trust results in fewer difficulties for enterprises in gaining legitimacy, thus foreign subsidiaries are more likely to select the wholly owned entry mode. The results also show that the effect is contingent on the formal institutions of host countries. The results of the mechanism test suggest that social trust influences subsidiaries' entry mode choice by reducing information asymmetry, costs and uncertainty risks. This study further finds that selecting a fit entry mode based on social trust level substantially increases foreign subsidiary performance and this effect is more significant when multinational enterprises (MNEs) are state-owned enterprises (SOEs).
Research limitations/implications
The main limitation of this paper is its only focus on foreign subsidiaries of Chinese MNEs, which may limit the generalizability of research findings.
Originality/value
This paper responds to the call for conducting more research on informal institutions. Findings highlight the critical role of informal institutions in helping foreign subsidiaries in gaining legitimacy in host countries and the essentialness of selecting a fit entry mode based on the informal institutions of host countries for the development of foreign subsidiaries.
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