Venturing into Foreign Markets: The Case of the Small Service Firm

1993 ◽  
Vol 17 (4) ◽  
pp. 29-41 ◽  
Author(s):  
M. Krishna Erramilli ◽  
Derrick E. D'Souza
Keyword(s):  
Direct Investment ◽  
Small Firms ◽  
Firm Behavior ◽  
Capital Intensity ◽  
Foreign Market ◽  
Service Industries ◽  
Foreign Market Entry ◽  
Service Firms ◽  
Foreign Markets ◽  
Entry Behavior

The study contrasts foreign market entry behavior of small and large service firms. The sample consisted of 141 firms of which 54 were small firms and 87 were larger firms. The study provides empirical evidence that the behavior of small firms differs from that of larger firms mainly in service industries characterized by higher capital intensity. It also suggests that at lower levels of capital intensity, small firm behavior may resemble that of larger firms. More specifically, In industries characterized by lower levels of capital Intensity, small service firms are as likely as their larger counterparts to enter culturally distant markets and to choose foreign direct Investment (FDI) modes of entry. But, at higher levels of capital Intensity, small service forms are less likely than larger ones to enter culturally distant markets, and to choose FDI modes of entry.

scholarly journals Barriers to enter in foreign markets: evidence from SMEs in emerging market

2017 ◽  
Vol 34 (1) ◽  
pp. 68-86 ◽  
Author(s):  
Mahfuzur Rahman ◽  
Moshfique Uddin ◽  
George Lodorfos
Keyword(s):  
Developing Country ◽  
Market Entry ◽  
Emerging Market ◽  
Foreign Market ◽  
Partial Least Square ◽  
Foreign Market Entry ◽  
Barriers To Entry ◽  
Foreign Markets ◽  
Content Type ◽  
Economic Barriers

Purpose Foreign market entry is considered as a key strategy to grow and survive over longer period of time for small and medium enterprises (SMEs). The decision to enter a foreign market is not a straightforward story. Considering resource limitation, SMEs need to analyse the key barriers to entry in foreign markets very carefully. The purpose of this paper is to identify these barriers for the SMEs in a developing country. Design/methodology/approach This study has used primary data collected through questionnaires from 212 Bangladeshi SMEs. A mixed method data analysis technique is used to analyse the firms both from micro- and macro-levels. Following the running example-based case study approach, this study has developed and validated a partial least square-based structural model to assess the key barriers to entry in foreign markets. Findings This study has identified the key socio-economic barriers faced by the SMEs in a developing country to enter in foreign markets. It has successfully framed the socio-economic barriers to enter in foreign markets for Bangladeshi SMEs as a second-order hierarchical model. Originality/value It is often believed that foreign market entry is more affected by social barriers as explained by the existing theories including the Uppsala model. This study, however, revealed that the international market expansions of SMEs in developing countries are more sensitive to the economic barriers.

scholarly journals Locational Factors and Foreign Market-entry Considerations for Malaysian Contractors

2012 ◽  
Vol 9 (1) ◽  
pp. 27-36 ◽  
Author(s):  
A.R Abdul_Aziz
Keyword(s):  
Market Entry ◽  
Foreign Market ◽  
Foreign Market Entry ◽  
Foreign Markets ◽  
Wide Range ◽  
Space Limitation ◽  
Model Approach

Past studies on contractor internationalisation adopt a unimodelapproach. Taking up the call of a few scholars, a study isconducted, this time by integrating several extant models of fi rminternationalisation. Malaysian international contractors are usedto test this approach. Due to space limitation, this paper is focusedonly on locational factors. It begins by justifying the inclusion oflocational factors in a multi-model approach. Then it posits thatlocational disadvantage is a more intellectually appealing conceptthan locational advantages. Empirically, it shows that the surveyedcontractors evaluate a wide range of factors before making thego/no go decision to enter foreign markets. It also shows thatpsychic distance was not their major concern. Finally, the locationaldisadvantages create a market space for international contractorswith the tenacity to overcome them, which the sampled populationpossessed.

Extended Gravity

2019 ◽  
Vol 86 (6) ◽  
pp. 2668-2712 ◽  
Author(s):  
Eduardo Morales ◽  
Gloria Sheu ◽  
Andrés Zahler
Keyword(s):  
Home Country ◽  
Geographic Location ◽  
Foreign Market ◽  
Foreign Market Entry ◽  
Foreign Markets ◽  
Exporting Firms ◽  
Extended Gravity ◽  
Per Capita ◽  
Export Destination ◽  
The Cost

AbstractExporting firms often enter foreign markets that are similar to their previous export destinations. We develop a dynamic model in which a firm’s exports in a market may depend on how similar the market is to the firm’s home country (gravity) and to its previous export destinations (extended gravity). Given the large number of export paths from which forward-looking firms may choose, we use a moment inequality approach to estimate our model. Our estimates indicate that sharing similarities with a prior export destination in terms of geographic location, language, and income per capita jointly reduces the cost of foreign market entry by 69–90%. Reductions due to geographic location (25–38%) and language (29–36%) have the largest effect. Extended gravity thus has a large impact on export entry costs.

scholarly journals Effectuation and foreign market entry of entrepreneurial firms

2015 ◽  
Vol 49 (9/10) ◽  
pp. 1436-1459 ◽  
Author(s):  
Sylvie Chetty ◽  
Arto Ojala ◽  
Tanja Leppäaho
Keyword(s):  
Decision Making ◽  
Market Entry ◽  
Foreign Market ◽  
Foreign Market Entry ◽  
Decision Making Process ◽  
Entrepreneurial Firms ◽  
Internationalization Process ◽  
Foreign Markets ◽  
Content Type ◽  
Original Field

Purpose – The purpose of this study is to examine the decision-making process for entrepreneurial firms when entering foreign markets and how and why they entered those markets. Design/methodology/approach – A nascent theory in entrepreneurship called effectuation is combined with internationalization process theory as the conceptual framework to study decision-making under uncertainty. The central concept in both these theories is relationships and how they can be used to gain knowledge and thus reduce uncertainty and in the case of effectuation to co-create opportunities to enter foreign markets. The research design involves a multiple case study of software firms from Finland and New Zealand. Findings – It was found that entrepreneurs differentiate between foreign market selection and foreign market entry during their internationalization process, potentially using different decision-making processes in them. They tend to interweave effectuation and causation logics as substitutes in their decision-making. Uncertainty during foreign market entry is not always a barrier because it can provide opportunities depending on the logic used. In addition, there is evidence that entrepreneurs who have existing relationships in foreign markets tend to use effectuation to select and enter foreign markets. Originality/value – This paper transposes effectuation from its original field of entrepreneurship research to the context of internationalizing entrepreneurial firms. Consequently, it contributes toward understanding the decision-making process for selecting and entering foreign markets.

Internationalisation by Business Service Firms: Towards a New Regionally Based Conceptual Framework

1998 ◽  
Vol 30 (1) ◽  
pp. 109-128 ◽  
Author(s):  
P N O'Farrell ◽  
P A Wood
Keyword(s):  
Foreign Market ◽  
Foreign Market Entry ◽  
Service Firms ◽  
Business Service ◽  
Corporate Networks ◽  
International Production ◽  
External Relations ◽  
Service Activity ◽  
Eclectic Paradigm ◽  
Key Dimensions

In this paper we critically review the applicability of the dominant paradigm of international production theory, internalisation theory, and the eclectic paradigm, concluding that they are of very limited utility in analysing the process of internationalisation by business service firms. The principal aim is to conceptualise the influence of three key dimensions of business service activity on internationalisation: the external relations and patterns of interfirm networking adopted by business service firms; their close relationships with clients; and the significance of these relationships in home-region markets, affording regional externalities which also strongly influence their propensity to export. Evidence from Scotland and the South East of England shows a regional influence on the mode of foreign-market entry, although few firms explicitly choose particular foreign markets to enter. The most common entry mechanism involves responding to particular orders. Similarly, the entry-mode decisions of 70% of the firms were made without consideration of any alternative modes. The evident importance of interfirm, including client corporate networks, and the influence of regional conditions upon internationalisation, leads to a conclusion in which we draw on a recent socially based interpretation of business behaviour.

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