Foreign market entry mode choice of hotel companies: Determining factors

Abstract

Decisions regarding firm internationalisation, especially when it comes to choosing which market entry mode to use, have been one of the most frequently discussed topics in academic literature in the last few decades. Many studies have been conducted from different perspectives, either focusing on one or several sectors or analysing companies from a specific country. Nevertheless, there are few studies dealing with the Chinese hotel industry. The aim of this study is to analyse the relationship between environmental and firm-specific factors and entry mode choice by the largest Chinese hotel chains. Using a sample of 185 entries, the results show that cultural distance, market attractiveness, firm international experience, asset intangibility, firm size and the number of Chinese outbound tourists visiting each country are determining factors of entry mode choice.

Choice of Entry Mode Into the Internationalisation Process by Dominant Spanish Hotel Chains

“…This importance given to the selection of entry modes is not a new development, something which is evident in the extensive research projects carried out in regards to this subject (Contractor & Kundu, 1998;Ramón, 2002;Quer, Claver & Andreu, 2006;Driha & Ramón, 2011;Berbel & Ramírez, 2011;Martorell et al, 2013;García de Soto & Vargas, 2015, Santos et al, 2016Andreu, Claver & Quer, 2017;Kruesi et al, 2017, Berbel, Palacios, & Ramírez, 2017. Therefore, it is important to be aware of what is understood by this decision.…”

“…In terms of international expansion, hotel chains have two main options, depending on whether or not they are willing to make a direct foreign investment (DFI). Traditional views sustain that companies that possess the required resources and seek greater control will opt for capital-based investment modes, opting for contractual modes if they do not possess the required resources or if environmental conditions advise against investment (Andreu et al, 2017). Given that hotel chains currently show a preference for entry modes that do not require capital investment (Contractor & Kundu, 1998a;Martorell & Forteza, 2010;Alon et al, 2012;Santos et al, 2016), With the aim of proposing an explicative model of the selection of the entry mode into an international market for the hotel sector which identifies the variables which ISSN 2174-548X 133 can influence this decision, we carry out a review of the models which have been applied to the sector and identify the existence of three types of variables which condition the entry mode chosen by the hotels: factors regarding the destination country, specific company factors (structural characteristics), strategic and control factors.…”

“…Theory (Pak & Park, 2004, Andreu et al, 2017. Another of the characteristics that the company itself can change as a result of the high risk of this entry mode.…”

“…The level of development presented by the market to which the hotel company aims to access, which will have a great impact on the final decision made. A country with a high level of development, which in terms of infrastructure, standard of living or public investment will represent a more attractive market that is susceptible to accepting a new company (Andreu et al, 2017). Studies by Dunning & McQueen (1981, 1982a, 1982b show that in terms of the hotel industry, the more economically ISSN 2174-548X 136 developed the country, the greater the impact of shareholders on the business in question.…”

“…Within a traditional view, in line with the Uppsala Model, we can see how a number of authors state that the more international experience, the less help a company needs from a local partner (Erramilli et al, 2002;León et al, 2011;Andreu et al, 2017).…”