scholarly journals Why wait? Organizational learning, institutional quality and the speed of foreign market re-entry after initial entry and exit

2018 ◽  
Vol 53 (6) ◽  
pp. 911-929 ◽  
Author(s):  
Irina Surdu ◽  
Kamel Mellahi ◽  
Keith W. Glaister ◽  
Giulio Nardella
Keyword(s):  
Organizational Learning ◽  
Institutional Quality ◽  
Foreign Market ◽  
Entry And Exit ◽  
Initial Entry

Multinational franchise entry and institutional quality: evidence from Mexican cities

2017 ◽  
Vol 15 (3) ◽  
pp. 313-337 ◽  
Author(s):  
Alexandros Fakos ◽  
Maria Merino
Keyword(s):  
Fast Food ◽  
Sample Selection ◽  
National Level ◽  
Institutional Quality ◽  
Foreign Market ◽  
Institutional Factors ◽  
Market Size ◽  
Content Type ◽  
Log Linear ◽  
The City

Purpose The purpose of this paper is to document the extensive heterogeneity in institutions within countries and investigate which institutional factors are the most relevant for international brands. Design/methodology/approach The paper analyzes the entry patterns of three global fast-food franchise networks in 78 Mexican cities using discrete outcome models and ordered probit in particular. To summarize the quantitative importance of the results, the analysis includes also log-linear regressions with Heckman correction for the city observations without franchise presence. Findings Institutional factors are critical for an international franchisor in the decision to enter a new market. The most important institutional quality proxy for franchise entry is the rate of formal employment. The more the informal employment in a city, the lower the number of franchised stores and the lower the probability of brand presence in the city. Research limitations/implications Only three fast-food franchises are included in the paper, which limits the generalization of the results beyond the sector and Mexico. Another limitation of the methodology of this paper is that the authors estimate the effect of institutions on multinational franchise entry conditioning on market size. The issue here is that if institutions increase gross domestic product (GDP) per capita, then the demand for multinational franchises also increases. Such an effect cannot be captured if we condition on market size in our econometric models. This is particularly important for policy-makers aiming to quantify costs and benefits of reforms but not an important consideration for practitioners who might take institutions as given and are mainly interested in entry strategies that maximize profitability. Practical implications Institutional variables, and not only market factors, are critical to understand the entry decision of global franchisors in Mexico. In particular, the extent of informality is relevant in explaining the store location. It is necessary to understand how managers value the quality of institutions and which dimensions are most important for multinationals. In addition, the analysis should be conducted both at the national and sub-national level, given that within-country heterogeneity is prevalent in emerging markets. Social implications Cities must reinforce and communicate their institutional quality to attract foreign investment by franchises in particular. Originality/value We test several dimensions of institutional quality at the urban level as determinants of multinationals? decision to enter a city in a foreign market. We use novel administrative data at the municipality level and we employ econometric model that takes into account the discreetness of entry data and the fact that there are cities with no franchise presence. We control for sample selection, which comes from the zero number of stores in some city observations in the regressions.

scholarly journals Product Standards and Firms’ Export Decisions

2019 ◽  
Vol 33 (2) ◽  
pp. 353-374 ◽  
Author(s):  
Ana M Fernandes ◽  
Esteban Ferro ◽  
John S Wilson
Keyword(s):  
Developing Countries ◽  
Market Access ◽  
Food Products ◽  
Foreign Market ◽  
Destination Country ◽  
Entry And Exit ◽  
Negative Effects ◽  
Product Standards ◽  
Exporting Firms ◽  
Export Decisions

Abstract Two novel datasets are used to estimate the effect of product standards on firms’ export decisions. The first covers all exporting firms in 42 developing countries. The second covers pesticide standards for 243 agricultural and food products in 80 importing countries over 2006–2012. The analysis shows that product standards affect significantly foreign market access. An increase in the stringency of standards in the destination country, relative to the exporting country, lowers firms’ probability of exporting, deters exporters from entering new markets, and fosters exit from existing markets. Smaller exporters are more affected in their market entry and exit decisions by the relative stringency of destination standards than larger exporters. Networks of other exporters from the same country can help overcome the negative effects of the relative stringency of destination standards on exporter entry and exit.

Proactive learning culture

2014 ◽  
Vol 31 (5) ◽  
pp. 477-505 ◽  
Author(s):  
Itzhak Gnizy ◽  
William E. Baker ◽  
Amir Grinstein
Keyword(s):  
Organizational Learning ◽  
Lower Order ◽  
Foreign Market ◽  
Higher Order ◽  
Content Type ◽  
Program Adaptation ◽  
Market Launch ◽  
Local Integration ◽  
The Impact

Purpose – Although small and medium sized enterprises (SMEs) account for a significant portion of international trade, little is known about the role of strategic orientation culture in improving their foreign launch success. Three orientations – market, entrepreneurial, and learning are all related to organizational learning priorities and reflect a higher order dynamic capability (DC), proactive learning culture (PLC). The authors assert that PLC is particularly important to SMEs whose lack of market power and resources render them vulnerable in risky foreign market launch. Marketing program adaptation and local integration are examined as behavioral mediators of the impact of PLC on foreign market launch success. The paper aims to discuss these issues. Design/methodology/approach – The DC framework guides the study. The authors employ a model with a higher order PLC, two mediating behaviors, and firm foreign market launch success to report on an empirical study of US SMEs that operate in foreign markets. The authors used hierarchical regression analysis and extensive post hoc analyses/robustness checks. Findings – Consistent with the DC framework, SMEs’ foreign launch success is driven by higher and lower order behaviors. The impact of the higher order PLC construct was mediated by two lower order behaviors, marketing program adaptation and local integration. Notably, PLC's influence is stronger than the influence of any subset of its one/two/three first order components. Practical implications – SMEs need to pay attention to an array of organizational learning processes that combine to engender a PLC, which help optimize the deployment of more tangible, lower order behaviors required for foreign launch success. Originality/value – Introducing PLC as a DC that enables firms to proactively develop market-oriented, innovative capabilities using a knowledge-based approach. The elements of PLC reflect a more complete view of the role of learning in driving the assembly of lower order behaviors in foreign market launch, which requires both a market-oriented approach and the ability to innovate under conditions of uncertainty. While each element of PLC is valuable, the higher level impact of all three facilitates a more effective culture for those firms, which choose to enter new markets.

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