Service Firms’ International Entry-Mode Choice: A Modified Transaction-Cost Analysis Approach

1993 ◽  
Vol 57 (3) ◽  
pp. 19-38 ◽  
Author(s):  
M. Krishna Erramilli ◽  
C. P. Rao
Keyword(s):  
Cost Analysis ◽  
Transaction Cost ◽  
Mode Choice ◽  
Entry Mode ◽  
Capital Intensity ◽  
Service Firms ◽  
Entry Modes ◽  
Transaction Cost Analysis ◽  
Entry Mode Choice ◽  
Production And Consumption

Some peculiar characteristics of service firms, such as low capital intensity and the inseparability of production and consumption, have necessitated the modification of the traditional transaction-cost framework used to study entry-mode choice. By relaxing some unduly restrictive assumptions of the conventional transaction-cost analysis (TCA) model, the paper argues that firms prefer to start with full-control modes. It postulates that substantial variation in entry-mode choice occurs when firms that are characterized by low asset specificity relinquish control in response to the rising costs of integration or the diminishing ability to integrate. Several hypotheses on the propensity of service firms to employ shared-control entry modes are developed and tested. The results not only provide insights into entry-mode choice by service firms but also indicate how the transaction-cost framework can be broadened to develop a more comprehensive model for understanding entry-mode choice.

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.

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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