scholarly journals A network perspective on foreign entry modes of small knowledge-intensive services firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Martina Battisti ◽  
Joanna Scott-Kennel ◽  
David Deakins
Keyword(s):  
Mode Choice ◽  
Entry Mode ◽  
Entry Modes ◽  
Content Type ◽  
Entry Mode Choice ◽  
Firm Internationalization ◽  
Institutional Ties ◽  
Knowledge Intensive ◽  
Network Patterns ◽  
Closed Network

Purpose Integrating network attributes from studies of social networks, business relationships and small- to medium-sized enterprise (SME) internationalization, this study adopts a perceptual view of a firm’s focal “net” of relationships to examine foreign market entry mode choice. This study aims to examine how the interaction between knowledge-intensive service (KIS) firm’s network ties, embeddedness and position is related to choice of mode and subsequently the firm’s perceived insidership status within its focal net. Design/methodology/approach This research is based on qualitative interviews with 25 small- to medium-sized KIS firms engaged in direct exporting or foreign direct investment (FDI). This study derives an empirically grounded framework of four distinct network patterns of these KIS firms through an iterative process of triangulation between cases and theory. Findings The four network patterns illustrate the complex interaction between network attributes and entry mode choice by KIS firms. The findings suggest formal ties and centrality in closed network relationships provide the “central controller” firm discretion over their entry mode choice. Resource-intensive FDI by “opportunistic investors” proved essential to securing centrality through formal, institutional ties. Less optimal patterns lacking institutional ties and centrality, however, precluded choice of FDI by “specialized exporters” and “client followers.” The study finds that entry modes are less likely to be influenced by the firm’s embeddedness in open or closed network relationships, but rather by the desire to achieve a more central network position and legitimacy through more formal, less imitable ties. Research limitations/implications The findings demonstrate the importance of network structure, a position of centrality, and strength of professional and institutional ties to small KIS firm internationalization. By adopting a more finely grained examination of the interaction between key attributes of the firm’s focal net, this study provides a valuable first step in conceptualizing the complexities associated with networking and adoption of export/investment internationalization modes. Practical implications There are a number of implications for the strategic and operational facets of smaller KIS firm internationalization. To avoid excessive network liability for resource-deficient SMEs, practitioners should consider network positioning as a strategic activity, with the costs associated with building and maintaining networks offset against economic- and resource-related returns. Originality/value The authors contribute to a better understanding of entry mode choices of KIS by taking a network perspective that accounts for the combined effects of different network attributes. The four network patterns identified extend current theoretical knowledge on the role of networks for entry mode choices of small KIS by highlighting that entry mode choices reflect the particular firm’s focal net and its attempt to achieve insidership status through high centrality and formal ties.

Interorganizational network on top management team – entry mode choice relationship

2018 ◽  
Vol 11 (4) ◽  
pp. 301-322
Author(s):  
Subhasree Mukherjee ◽  
Deepak Dhayanithy
Keyword(s):  
Mode Choice ◽  
Top Management Team ◽  
Entry Mode ◽  
Moderating Effect ◽  
Management Team ◽  
Interorganizational Network ◽  
Entry Modes ◽  
Content Type ◽  
Entry Mode Choice ◽  
Full Control

Purpose By applying upper echelons perspective to the choice of full or shared control entry modes, this study aims to explore the moderating effect of interorganizational network on the top management team (TMT) characteristics and entry mode choice relationship. Existing studies on TMT’s demographic characters’ influence on entry mode choice remains inconclusive. The implicit assumption in extant literature is that firms share similar network structural advantages. This study integrates the largely ignored, network structural concept with entry mode to show how firm-level decisions are the outcome of interaction between internal and external environment. Design/methodology/approach The interorganizational network is modeled using board interlock data. The moderating effect of network is modeled on network size, centrality of the firms and density of ties, considering tenure and international experience of the upper echelons. The hypotheses are tested based on a sample of 83 publicly listed Indian firms from 2012 to 2015. Findings The findings indicate that despite a high international experienced TMT’s preference of full control entry mode, the high central position of the firm can influence the decision against full control entry modes. However, the choice of full control entry mode is also enhanced by the density of firm’s network. Similar evidence is also observed with tenure variable as well where the moderating variables showed a trend toward influencing the entry mode choices. Originality/value Thus, this study attempted to reconcile the inconsistencies prevalent in the relationship between TMT variables and choice of entry mode by introducing the contextual factor of interorganizational networks.

Augmenting versus exploiting entry modes in soft services

2014 ◽  
Vol 31 (6) ◽  
pp. 621-636 ◽  
Author(s):  
Jose Pla-Barber ◽  
Cristina Villar ◽  
Fidel León-Darder
Keyword(s):  
Cultural Distance ◽  
Mode Choice ◽  
Entry Mode ◽  
Foreign Market ◽  
Foreign Market Entry ◽  
Entry Modes ◽  
Content Type ◽  
Entry Mode Choice ◽  
Knowledge Based ◽  
High Resource

Purpose – The purpose of this paper is to address foreign market entry mode as a way to enhance firm’s knowledge base, providing new insights into traditional explanations of entry mode choice for soft services. The authors offer an alternative knowledge-based approach to assess foreign investment decisions by considering the role of resource-augmenting (direct investment) and resource-exploiting strategies (licenses). In addition, the authors untie the type of experiential knowledge, i.e., host country and mode experience, to analyze its interactions with environmental uncertainties such as cultural distance. Design/methodology/approach – Based on a customized database of the Spanish Global Hotel industry covering practically all foreign entries until 2012, the authors use regression analysis to test the proposal. Findings – The authors demonstrate how in hotel chains (a) cultural distance influences the use of high resource-augmenting modes, due to both the difficulties in transferring the knowledge to third parties but also the imperative need of learning from local markets and (b) how strong brands tend to use resource-augmenting modes in their first steps abroad as a strategy to achieve a minimum level of resource basis to exploit it in a later stage. Originality/value – The findings question the appropriateness of prior assumptions from traditional internationalization process theories for soft services MNE and provide an alternative approach to assess entry mode choice in this context.

scholarly journals Influences of cognitive dimensions on the collaborative entry mode choice of small- and medium-sized enterprises

2017 ◽  
Vol 34 (5) ◽  
pp. 652-673 ◽  
Author(s):  
Manlio Del Giudice ◽  
Ahmad Arslan ◽  
Veronica Scuotto ◽  
Francesco Caputo
Keyword(s):  
Host Country ◽  
Market Entry ◽  
Mode Choice ◽  
Entry Mode ◽  
Institutional Distance ◽  
Entry Modes ◽  
Content Type ◽  
Entry Mode Choice ◽  
Internationalisation Strategies ◽  
Cognitive Dimensions

Purpose The purpose of this paper is to address internationalisation of small- and medium-sized enterprises (SMEs) by specifically focussing on collaborative entry modes. Despite significant research done on market entry and internationalisation strategies of firms, the use of collaborative entry modes by SMEs during internationalisation has not received a lot of attention. The authors contribute to foreign market entry studies by analysing the influences of cognitive dimensions on collaborative entry mode choice (equity vs non-equity modes) of SMEs in their international markets. Design/methodology/approach The authors analyse the influences of cognitive dimensions on the choice between equity-based vs non-equity-based collaborative entry modes. The empirical sample consists of internationalisation strategies of 345 Italian SMEs, where the authors used a questionnaire to collect the data. The authors use structural equation modelling to analyse influences of factors like asymmetric information, informal institutional distance, time trends of country, perception of size and resources of potential host country partners, and perception of host country partners’ power on this important market entry mode. Findings The results show that high informal institutional distance leads to preference of non-equity-based collaborative entry mode by Italian SMEs. The authors also find that positive time trends of the host country, positive perception of size and resource of the local partner, as well as the local partners’ power leads to preference of equity-based collaborative entry mode by Italian SMEs. Originality/value This study focusses on an ignored aspect of market entry strategies, i.e., equity vs non-equity collaborative entry mode choice of SMEs. The authors use insights from resource-based view and cognitive dimensions literature, to address the influences of five cognitive dimensions on the collaborative entry mode choice of SMEs during their internationalisation.

Entry modes and barriers to internationalisation in China: an overview of management consulting firms

2017 ◽  
Vol 21 (1) ◽  
pp. 37-49 ◽  
Author(s):  
Angels Niñerola ◽  
Maria-Victoria Sánchez-Rebull ◽  
Ana-Beatriz Hernandez-Lara
Keyword(s):  
Mode Choice ◽  
Entry Mode ◽  
Management Consulting ◽  
Entry Modes ◽  
Legal Form ◽  
Content Type ◽  
Entry Mode Choice ◽  
Top Managers ◽  
Consulting Firms ◽  
Management Consulting Firms

Purpose The purpose of the paper is to analyse the entry mode choice of the Spanish companies in China, the factors that influence it and the barriers that they found. Design/methodology/approach A qualitative approach is used by interviewing the partners of management consulting firms (MCFs) specialised in internationalisation processes in China. Findings The decision on the entry mode choice depends on whether the firm has incentives for investment with a partner rather than the size or the international experience of the board and the top managers. The barriers faced by Spanish companies in China are related to legal issues, bureaucracy, culture, language, trust and human resources. Practical implications Companies must have a differential factor to succeed in China and use a legal form that lets them to protect this advantage regardless of the entry form chosen. MCFs pointed out the need to collaborate with local people and to rely on a management team capable of overcoming the barriers. Originality/value One of the major contributions of this study is the methodology, as the view of the consultants in the internationalisation process of companies had not been studied before.

Governance, privatization and foreign direct investment

2018 ◽  
Vol 9 (4) ◽  
pp. 569-586
Author(s):  
Dongling Cai ◽  
Leonard Fengsheng Wang ◽  
Xiaokai Wu
Keyword(s):  
Social Welfare ◽  
Host Country ◽  
Foreign Firm ◽  
Mode Choice ◽  
Entry Mode ◽  
Mixed Duopoly ◽  
Economic Governance ◽  
Content Type ◽  
Entry Mode Choice ◽  
Optimal Degree

Purpose The purpose of this study is to investigate the interplay between economic governance and privatization, and how these two instruments affect the entry mode choice of the foreign firm and the social welfare of the host country. Design/methodology/approach This study constructs a mixed duopoly model wherein one domestic public firm competes with a foreign firm and investigates the influence of economic governance investment on the domestic government’s optimal degree of privatization choice and the foreign firm’s entry mode choice. Findings This study shows that (1) better economic governance enhances the effect of privatization on output, thus resulting in a lower degree of privatization; (2) the optimal privatization policy of the domestic government is partial privatization irrespective of the foreign firm’s entry mode choice; (3) with optimal investment by the domestic government on economic governance, the optimal degree of privatization is higher under FDI than export, and the host-country welfare is also higher under FDI. In particular, this study demonstrates that better economic governance decreases the threshold of the degree of privatization when the foreign firm switches from export to FDI, implying that better economic governance stimulates the foreign firm to undertake FDI in the host country. Practical implications The findings shed some light on both the mixed ownership reform of the SOEs in China and attracting foreign capital inflow to improve the host country’s social welfare. Originality/value To the best of the authors’ knowledge, this study constitutes the first attempt to build a theoretical framework to explore how the interactions between economic governance and privatization influence the entry mode choice of the foreign firm.

Foreign Business Environments and Entry Mode Choice

2012 ◽  
pp. 165-181
Author(s):  
Maud Oortwijn
Keyword(s):  
Host Country ◽  
Joint Venture ◽  
Mode Choice ◽  
External Environment ◽  
Entry Mode ◽  
Entry Modes ◽  
Host Countries ◽  
Entry Mode Choice ◽  
Business Studies ◽  
Business Environments

The entry mode choice is at the core of International Business studies (Oortwijn, 2011a). IB research concerns the organization of firm activities across country borders and thus across different cultures and business contexts. These host country differences impact the firm’s way of working internally within the organization and in interaction with the external environment in the host country. Companies can consider a broad range of entry modes to organize across country borders, including partnership, trade, joint venture (JV), and wholly owned enterprise (WOE). The entry mode defines what activities are internalized within the firm and how the firm interacts with the external environment in different host countries.

CEO characteristics and SME foreign market entry mode choice

2016 ◽  
Vol 33 (2) ◽  
pp. 246-275 ◽  
Author(s):  
Katharina Laufs ◽  
Michael Bembom ◽  
Christian Schwens
Keyword(s):  
Host Country ◽  
Market Entry ◽  
Mode Choice ◽  
Entry Mode ◽  
Foreign Market ◽  
Foreign Market Entry ◽  
Content Type ◽  
Entry Mode Choice ◽  
Foreign Market Entry Mode ◽  
Ceo Characteristics

Purpose – Using arguments from the upper echelons perspective this paper aims to examine the impact of CEO characteristics on small and medium-sized enterprises’ (SMEs’) equity foreign market entry mode choice and how these associations are jointly moderated by geographic experience of the firm and host-country political risk. Design/methodology/approach – The empirical analysis draws on data gathered from German SMEs testing triple-interaction effects between CEO’s age, firm tenure and international experience, geographic experience of the firm (organizational level), and host-country political risk (environmental level). Findings – Empirical findings validate that the influence of CEO’s age and firm tenure on SME foreign market entry mode choice varies by managers’ level of managerial discretion (i.e. latitude of action) as determined by the SME’s geographic experience and the level of political risks prevailing in the foreign market. Practical implications – Empirical findings help SME owners and managers to understand how CEO’s age and firm tenure are related with individual’s risk-taking behavior and information-processing demands and how these contingencies vary by the context in which the individual CEO is nested. Originality/value – This study contributes to the growing body of literature focussing on SME foreign market entry mode choice by emphasizing the important role of CEOs in the decision to internationalize. More specific, this study contributes by an examination of the interactive effect of CEO’s age, firm tenure and international experience, geographic experience of the firm and host-country political risk and, therefore, emphasizes the context and boundary conditions under which the association between CEO characteristics and foreign market entry mode choice is more or less pronounced.

scholarly journals Analysis of the Entry Mode Choice from Both Transaction Costs and Resource Based Theory

2019 ◽  
Vol 6 (1) ◽  
pp. 7-20
Author(s):  
Luis Araya - Castillo ◽  
Nicolás Barrientos Oradini ◽  
Víctor Manuel Yánez - Jara ◽  
Ángel Acevedo Duque
Keyword(s):  
Transaction Costs ◽  
International Business ◽  
International Entrepreneurship ◽  
Mode Choice ◽  
Entry Mode ◽  
International Strategy ◽  
Entry Modes ◽  
Entry Mode Choice ◽  
Strategy Change ◽  
Resource Based Theory

The liberalization of markets opened doors for expansion and increased the level of competition in numerous markets. This explains that firms are increasinglydiversifying across national borders. This phenomenon is related with the international entrepreneurship, since internationalization is an example of a strategy change that can be defined as an entrepreneurial act. In this context, the scholars in international business have given answers to basically three questions: Why, where, and how do companies internationalize. Since the present research deals with entry modes choice, the focus is clearly on “how.” The choice of entry mode constitutes one of the most critical decisions for international strategy success. This research analyzes the entry mode choice from the perspective of both transaction costs and resource based theory, because these perspectives use different assumptions and consider different assumptions. Given this, I propose 4 propositions related with the study of entry mode choice from the transaction costs and resource based theory.

scholarly journals Determinants of EMNEs’ Entry Mode Decision with Environmental Volatility Issues: A Review and Research Agenda

2021 ◽  
Vol 14 (10) ◽  
pp. 500
Author(s):  
Yameng Li ◽  
Ruosu Gao ◽  
Jingyi Wang
Keyword(s):  
Environmental Factors ◽  
Multinational Enterprises ◽  
Joint Venture ◽  
Emerging Market ◽  
Mode Choice ◽  
Entry Mode ◽  
Vital Role ◽  
Entry Modes ◽  
Entry Mode Choice ◽  
Country Level

Emerging market multinational enterprises (EMNEs) play a vital role in global economic development and usually adopt aggressive internationalization strategies. However, the volatile global environment has caused EMNEs to face various risks in their overseas expansion. To maximize the competitive advantages and achieve successful expansion, EMNEs should choose the most suitable foreign entry mode. Therefore, EMNEs need to understand what environmental factors affect their decision-making and how they influence the choice of entry modes, especially in a volatile environment. This review examines 44 selected journal articles from 1996 to June 2021 on the environmental volatility determinants of EMNEs’ entry mode choice. The entry mode choice we examined is mainly wholly-owned subsidiary versus international joint venture. We categorized the environmental volatility determinants investigated in the literature we reviewed into country-level factors (such as cross-national distance) and industry-level factors (such as industry condition). The main contributions are: (1) the review reveals three research gaps in extant studies, which are lack of research on external environmental factors, lack of research on multinationals from less concerning emerging economies, and lack of research on small-to-medium (SMEs) enterprises. (2) Practically, the study highlights the importance of understanding external environmental factors for EMNEs to make the most suitable entry mode decisions.

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