Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors

Abstract

Abstract. Firms interested in servicing foreign markets face a difficult decision with regards to the choice of an entry mode. The options available to a firm include exporting, licensing, joint venture and sole venture. Several factors that determine the choice of a specific foreign market entry mode have been identified in previous literature. These factors can be classified into three categories: ownership advantages of a firm, location advantages of a market, and internalization advantages of integrating transactions. This study examines the independent and joint influences of these factors on the choice of an entry mode. Multinomial logistic regression model is employed to test the hypothesized effects.

Internationalization trajectories--a cross-country comparison: Are large Chinese and Indian companies different?

“…At the micro-level, substantial research has focused on explaining the way in which international expansion takes shape in studies on entry mode choice (Brouthers, 2002;Chang, 1995;Kogut and Singh, 1988;Makino and Neupert, 2000), including the identification of the determinants of such choices like markets and investment risk, firm strategic factors and ownership advantages (Kim and Hwang, 1992;Agarwal and Ramaswami, 1992), as well as their performance implications, that have been found to be dependent upon host country context, firm-specific resources and organizational control (Woodcock et al, 1994;Slangen, 2006;Siripaisalpipat and Hoshino, 2000), firm strategy (Busija et al, 1997) or entry sequence (Pan et al, 1999).…”

Diversification and market entry choices in the context of foreign direct investment

“…The international business literature generally treats these decisions as independent. Studies of the mode of entry in the context of FDI tend to view a broad range of possibilities, considering different levels of control from wholly-owned subsidiaries through joint ventures to non-equity alliances (Agarwal and Ramaswami, 1992;Anderson and Gatignon, 1986;Aulakh and Kotabe, 1997;Larimo, 1995). These approaches are based on the transaction costs perspective and the implied OLI paradigm (Dunning, 1980;Hill, Hwang and Kim, 1990).…”

Foresight capabilities and SME product/service adaptiveness: the moderating effect of industry dynamism

“…Out of the 500 questionnaires administered, a total of 194 fully completed and useful questionnaires were returned. The resulting effective response rate of 38.8% is acceptable in comparison to similar mail surveys (Agarwal and Ramaswami, 1992;Nakos and Brouthers, 2002), and higher than response rates in other recent studies (Sarkar et al, 2009;Scleimer and Pedersen, 2014). To test the nonresponse bias, we statistically compared the questionnaires we received at the beginning of the data collection with those received at the end and no significant statistical differences were observed.…”