Foreign market entry mode choice of service firms: a contingency perspective (original) (raw)
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Entry mode choices in international markets: examining the antecedents of service firms' strategies
International Journal of Globalisation and Small Business, 2013
The intensification of markets globalisation and the diffusion of internationalisation strategies across various businesses, led the academic literature to challenge the notion of entry modes in international ventures. Nevertheless, with specific regard to soft-service industries, only a few authors investigated the entry-mode behaviour of firms for testing the applicability of traditional theories.
The Impact of Market-related Factors on the Choice of Foreign Market Entry Mode by Service Firms
Organizations and Markets in Emerging Economies
The topic of internationalization has received an increased amount of attention due to globalization and growing amounts of international trade. One of the most important factors for the success of foreign market operations is the choice of the entry mode. This paper investigates the key determinants for the choice of foreign market entry mode. Specifically, the research examines the effects of market-related factors of the selected entry mode on service companies. This study contributes to the existing knowledge of internationalization of service companies by analyzing market-related factors of entry modes. Moreover, it provides managerial implications that might be applied by companies and governmental agencies to promote investment and internationalization of local companies.
International market entry mode strategies of manufacturing firms and service firms
International Marketing Review, 2004
This research has two major purposes: developing and testing a resource‐based framework for entry mode choice and ascertaining the extent to which the determinants of foreign market entry mode choice in the manufacturing sector apply to foreign market entry mode choice in the non‐separable service sector. Using mail survey data collected from top‐level managers of US firms that had been engaged in international business, the article tests a number of research hypotheses concerning foreign market entry mode choice in the manufacturing and service sectors. The managerial and research implications of the findings are delineated and directions for future research are offered.
Service Firms' International Entry-Mode Choice: A Modified Transaction-Cost Analysis Approach
Journal of Marketing, 1993
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 (TeA) 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 sharedcontrol 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. A FTER a finn decides to enter a certain foreign market, it must choose a mode of entry, i.e., select an institutional arrangement for organizing and conducting international business transactions, such as contractual transfers, joint ventures, and wholly owned operations (Root 1987). The choice of the correct entry mode for a particular foreign market is "one of the most critical decisions in international marketing" (Terpstra and Sarathy 1991, p. 361). The chosen mode determines the extent to which the firm gets involved in developing and implementing marketing programs in the foreign
The experience factor in foreign market entry behavior of service firms
Journal of international business studies, 1991
The paper examines the effect of international experience on service firms' selection of foreign markets and entry modes. The investigation utilizes survey data from 151 United States-based service firms. Results on market selection suggest that, as their experience increases and becomes geographically more diversifled, service firms tend to choose markets that are culturally less similar to their home country. On entry mode choice, the paper departs from traditional linear conceptualizations and hypothesizes a U-shaped relationship between experience and propensity for integrated entry modes. Results generally support the hypothesis. The paper explains these findings and describes how service firms resemble and differ from manufacturing firms in their foreign market entry behavior.
This paper investigates the aspect of market commitment by international service firms into the new host market. Australia was chosen as the host market because it is a strong service economy. This paper responds to several calls for studies focusing on service firm internationalization and the often neglected market commitment aspect. After splitting service firms into capital intensive and knowledge intensive categories, it is argued that they exhibit different patterns of initial resource commitment. Adopting a case study approach, the results indicate that capital intensive service firms enter a new host market with relatively lower resource commitment than knowledge intensive service firms and hence follow the Uppsala process model more closely.
E-Commerce Effect on The Entry Modes Of Service Firms
INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY RESEARCH AND ANALYSIS, 2023
A lot of research papers focused on the analysis of factors influencing internationalization. Market attractiveness was analyzed, demand uncertainty, country risk and finally cultural similarity. Even though the above research explored specific factors, there was no systematic attempt to assess these factors and how they impact the entry mode selection of a service firm. This research suggests that technology is an important factor to be considered in selecting international market entry mode. Some service firms can become global from the beginning, but there is a group of services that cannot be created and distributed electronically. They can still use e-commerce technologies to increase the efficiency of service production and delivery. Keywords: Technology, e-commerce, service firms, international
Determinants of entry modes for international service organisations : evidence from China
Ibrc 2010 Research For Change Proceedings of 13th International Business Research Conference, 2010
This paper examines the influences on entry modes for Australian service organisations internationalising to China. A conceptual model was developed utilising past research in the field and internationalisation theory. The model incorporated the constructs of: resource commitments, previous international experience and whether or not the service could be offered independently of any physical product. The model was empirically tested using qualitative data from interviews conducted with senior representatives from 23 Australian service organisations with operations in China. The data indicated that these organisations increased the resource commitments to their Chinese operations, the longer they were in operation and the more familiar the organisation became with the Chinese environment. The data also suggested that, whilst international experience was desirable prior to entering China, it was not mandatory for success. A bias was identified amongst the respondents towards exporting those services which were separable from products to China and foreign direct investment, representative branches and significant local investment for services that were not separable from products.
Journal of International Management, 2010
The choice of a mode of market entry is a critical component of the internationalization strategy, and numerous empirical studies have focused on this topic. Prior research, however, has provided mixed empirical evidence and thus, is difficult to interpret and review. This study examines the external antecedents of the choice of entry mode by meta-analyzing data from 72 independent primary studies. We focus on the decision between wholly owned subsidiaries and cooperative entry modes. For each variable, hypotheses about the theoretically expected direction of effect are posited and tested. We find a strong positive relationship between power distance as a cultural trait of the firm's home country and the propensity to establish a wholly owned subsidiary. On the other hand, we find a negative association between country risk, legal restrictions, market growth, and market size and the preference for wholly owned subsidiaries. We extensively discuss the implications of the meta-analytical results and investigate moderating effects of industry type and the time of the study. The relationship between income level of the host country and entry mode depends, to some degree, on the industry type. Service companies exhibit a negative relationship between income level and wholly owned subsidiaries, while manufacturing companies show a positive relationship.