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.

Internationalisation by Business Services: A Methodological Critique of Foreign-Market Entry-Mode Choice

1995 ◽  
Vol 27 (5) ◽  
pp. 683-697 ◽  
Author(s):  
P N O'Farrell ◽  
L Moffat ◽  
P A Wood
Keyword(s):  
Market Entry ◽  
Service Sector ◽  
Cultural Distance ◽  
Mode Choice ◽  
Entry Mode ◽  
Foreign Market ◽  
Foreign Market Entry ◽  
Business Services ◽  
Entry Mode Choice ◽  
Foreign Market Entry Mode

In this paper the work of geographers, economists, and management scientists in studying interregional and international expansion by service companies is reviewed. A critique is presented of some of the fundamental methodological problems inherent in analysing foreign-market entry-mode choice. These are particularly apparent when studying the process of business service-sector internationalisation. Issues discussed include inconsistencies in the definition of which entry decision to analyse; the level of aggregation to adopt when modelling mode choice; mode choice and cooperative organisational networks; different approaches to measuring cultural distance and country risk; and the methodologies used to develop scales to represent the constructs relevant to internationalisation.

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.

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.

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.

How do linking, leveraging and learning capabilities influence the entry mode choice for multinational firms from emerging markets?

2017 ◽  
Vol 12 (2) ◽  
pp. 171-193 ◽  
Author(s):  
Wen Li ◽  
Bin Guo ◽  
Gangxiang Xu
Keyword(s):  
Emerging Markets ◽  
Host Country ◽  
Multinational Firms ◽  
Cultural Distance ◽  
Mode Choice ◽  
Entry Mode ◽  
Content Type ◽  
Entry Mode Choice ◽  
Learning Capabilities ◽  
The Relationship

Purpose Based on the linkage-leverage-learning (LLL) framework developed by Mathews (2006), the purpose of this paper is to examine how linking, leveraging and learning capabilities influence the choice of foreign-entry mode, and the way such influences are contingent on context factors in the emerging markets. Design/methodology/approach Contrary to a prior literature applying the LLL framework, which mainly used case studies, this paper adopts a quantitative approach and is based on a sample of 321 Chinese listed companies to test the hypotheses. Findings The results show that multinational firms from emerging markets (EMFs) with stronger LLL capabilities are more likely to choose the wholly owned mode in foreign entries. In addition, the relationship between linking capability and wholly owned entry mode choice is weaker at higher levels of cultural distance between home and host country. At the same time, the relationship between learning capability and wholly owned entry mode choice is weaker at higher levels of cultural distance between home and host country, and of institutional distance between prior entries and the focal entry. Research limitations/implications An entry mode strategy for firms without ownership advantages and the identification of boundary conditions for applying different LLL capabilities are recommended. The generalizability of the findings from a single-country setting still needs further validation with other emerging economies. Originality/value This paper treats internationalization of firms from emerging countries with a different perspective. The underlying idea in this study is that internationalization is not only a process for EMFs to utilize externally accessible assets abroad, but also a process of simultaneously combining internationalization with experiential learning and capability utilization in overseas markets. In addition, the authors also contribute to the literature by providing strong empirical evidence for validating the LLL model and extending the existing entry mode studies.

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