Drivers of Success for Market Entry into China and India

Abstract

China and India are the fastest growing major markets in the world and the most popular markets for foreign entrants. Yet no study has examined the success or failure of these entries.Using a new definition of success and a uniquely compiled archival database, the authors analyze whether and why firms that entered China and India succeeded or failed. The most important findings are rather counter-intuitive: smaller firms are more successful than larger firms, and greater openness of the emerging market have lower success. Other findings are that success is higher with earlier entry, greater control of entry mode, and shorter cultural and economic distance between the home and host nations. Importantly, with or without control for these drivers, success in India is lower than that in China. The authors discuss the reasons for and implications of these findings.3

Managing industrial service offerings in global business markets

“…Chan et al, 2006;Johnson and Tellis, 2008) and on overall headquarters-subsidiary relationships (e.g. Harzing, 2000;Leong and Tan, 1993).…”

The Spanish company in China: Entry forms and barriers to internationalization

“…Las empresas utilizan traductores lo que algunas veces lleva a interpretaciones erróneas: competitivos." Por lo tanto debe conseguirse una buena relación entre los costes de producción y el precio de venta para superar esta barrera (E2) porque la competitividad del mercado hace disminuir el éxito de la inversión (Johnson & Tellis, 2008).…”

A Theoretical Framework on Factors Affecting Entry Mode Choices of MNCS

“…A firm while making a choice of entry mode considers the degree of control it can receive by resorting to that particular mode of foreign entry. Johnson and Tellis (2008) have advocated the choice of an entry mode that renders the firm highest degree of control. Empirical study conducted by Ozlati and Abrami (2008) also provided enough evidence that Swedish firms in UAE used higher equity modes like free zones (wholly owned firm) to establish high control.…”

“…Firms should choose the modes that render them higher degree of control Johnson and Tellis (2008) Control is an important determinant of entry choice in UAE Ozlati and Abrami (2008)…”

“…Kumar and Subramaniam (1997), Chung and Enderwick (2001), as well as Nakos and Brouthers (2002) emphasized that the choice of market entry mode is a critical strategic decision for firms intending to conduct business overseas. Choosing the entry mode is a fundamental decision for a company as it impacts its marketing and production strategy (Johnson & Tellis, 2008). One way of viewing the entry mode alternatives is to view them as either equity modes or non-equity modes.…”