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Strategic Variables that Influence Entry Mode Choice in Service Firms

Published on Mar 1, 2007in Journal of International Marketing3.38
· DOI :10.1509/jimk.15.1.067
Esther Sanchez-Peinado6
Estimated H-index: 6
,
José Pla-Barber6
Estimated H-index: 6
(University of Valencia),
Louis Hébert7
Estimated H-index: 7
(HEC Montréal)
Cite
Abstract
Abstract This work investigates how a firm's international strategy affects choice of entry mode in the service sector. The inherent complexity associated with studying a heterogeneous sector such as services requires researchers to investigate variables that go beyond those drawn from traditional empirical work on the manufacturing sector. The adoption of a broader theoretical perspective and the introduction of these new variables may well provide further evidence of the determinants of service firms' entry mode choices. On the basis of 174 entry decisions of service firms, this study's results support the necessity of including additional strategic variables that specifically address this complex phenomenon, a decision that is not always associated just with efficiency and value-based considerations but with strategic issues as well. In addition, some variables that are routinely used in studies of the manufacturing sector were not significant or exhibited different results in different groups of servi...
  • References (57)
  • Citations (88)
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References57
Newest
Published on Dec 31, 2010
John H. Dunning62
Estimated H-index: 62
,
Sarianna M. Lundan14
Estimated H-index: 14
This is the second edition of the celebrated volume by Professor John H. Dunning, first published in 1993, which has now been not only updated but also enriched with the addition of a number of new topics. This addition was not least due to the expertise of the co-author, Sarianna Lundan, in the institutional aspects of international business and the internal governance of transnational corporations (TNCs). It is a comprehensive synthesis of all the theories in International Business based on ex...
Published on Jun 1, 2005in Journal of Business Research4.03
Jane W. Lu19
Estimated H-index: 19
(NUS: National University of Singapore),
Louis Hébert7
Estimated H-index: 7
(HEC Montréal)
Abstract This study attends to equivocal results regarding the relationship between equity control and international joint venture (IJV) performance by proposing a transaction-cost-based contingency framework. We examined the moderating effects of asset specificity and uncertainty on the relationship between foreign parent equity control and IJV survival in an empirical setting of Japanese IJVs in 12 Asian countries in the 1985–1996 period. Our findings suggest that in the presence of high asset...
Published on Jan 1, 2004in Journal of Business Research4.03
Cyril Bouquet2
Estimated H-index: 2
(UWO: University of Western Ontario),
Louis Hébert2
Estimated H-index: 2
('ENS Paris': École Normale Supérieure),
Andrew Delios37
Estimated H-index: 37
(NUS: National University of Singapore)
We investigate the effect of operating in service industries, in which separability and human capital intensity factors influence the choice of foreign entry mode and expatriate staffing decisions. To look into this issue, we compared 14,863 instances of Japanese foreign direct investment (FDI) into manufacturing and three service industries (wholesale trade, retail trade, and financial services). Our theoretical and empirical analyses support the assertion that in situations where required capa...
Published on Jan 1, 2003in Journal of International Business Studies7.72
Farok J. Contractor27
Estimated H-index: 27
(RU: Rutgers University),
Sumit K. Kundu23
Estimated H-index: 23
(SLU: Saint Louis University),
Chin-Chun Hsu4
Estimated H-index: 4
(SLU: Saint Louis University)
It is generally assumed that the performance of a firm improves with greater multinationality. Yet recent empirical studies have shown both a U-shaped relationship (which suggests an initially negative effect of international expansion on performance, before the positive returns of international expansion are realized) and an inverted-U-shaped relationship (which suggests that international expansion beyond an optimal level is again detrimental to performance, and results in a negative slope). T...
Published on Sep 1, 2002in Journal of International Business Studies7.72
Shige Makino24
Estimated H-index: 24
(CUHK: The Chinese University of Hong Kong),
Chung-Ming Lau22
Estimated H-index: 22
(CUHK: The Chinese University of Hong Kong),
Rhy-Song Yeh1
Estimated H-index: 1
(PKU: Peking University)
This study examined several hypotheses regarding the location choice of foreign direct investment from newly industrialized economies (NIEs). Using a sample of 328 Taiwanese firms in the analysis, this study found that the firms’ motivations had a significant impact on the choice of their investment location (developed countries vs. less developed countries), yet this impact was moderated by the capabilities that the firms possessed. The results suggest that both asset-exploitation and asset-see...
Published on Mar 1, 2002in Journal of International Business Studies7.72
Jane W. Lu19
Estimated H-index: 19
(NUS: National University of Singapore)
This paper compares the predictions of transaction cost and institutional theories in an empirical study of the entry mode choice for 1,194 Japanese foreign subsidiaries. The findings indicate the institutional model adds significant explanatory power over and above the predictions of the transaction cost model. Using the concepts of frequency-based, trait-based and outcome-based imitation, I find support for institutional isomorphism, as later entrants tended to follow the entry mode patterns e...
Published on Mar 1, 2002in Strategic Management Journal5.57
Anne-Wil Harzing45
Estimated H-index: 45
(University of Melbourne)
This paper adds an important explanatory variable to the well-established list of factors shown to influence the choice between foreign acquisitions and greenfield investments: the international strategy followed by the multinational company (MNC) in question. The MNC's international strategy is subsequently linked to the management of the two different entry modes by showing that differences in strategy are reflected in different headquarters—subsidiary relationships for acquisitions and greenf...
Published on Aug 1, 2001in Strategic Management Journal5.57
Sea Jin Chang25
Estimated H-index: 25
(KU: Korea University),
Philip M. Rosenzweig1
Estimated H-index: 1
Relatively few studies have examined the importance of an entry's sequential position to the choice of foreign entry mode. We use a dynamic model to analyze sequential entries into the United States from 1975 to 1992. Our findings show that several independent variables which explain a firm's initial mode of entry do not explain the modes of subsequent entries. These findings underscore the importance of experience in foreign investment, as companies learn from early entries and adapt the modes ...
Published on Jun 1, 2001in Academy of Management Journal7.19
Freek Vermeulen12
Estimated H-index: 12
(LBS: London Business School),
Harry G. Barkema18
Estimated H-index: 18
(Tilburg University)
Research on acquisitions has typically focused on acquisitions per se, examining issues such as performance and implementation problems. This study moves beyond that perspective and studies the influence on a firm's later expansions. We argue that exploitation of a firm's knowledge base through “greenfields” eventually makes a firm simple and inert. In contrast, acquisitions may broaden a firm's knowledge base and decrease inertia, enhancing the viability of its later ventures. Over time, firms ...
Published on May 1, 2001in Journal of Management Studies5.84
Yadong Luo64
Estimated H-index: 64
(UM: University of Miami)
The dynamics of the world economy and global competition patterns are encouraging multinational enterprises (MNEs) to expand into emerging economies. This study validates the proposition that entry mode selection in an emerging economy is influenced by situational contingencies at four levels: nation, industry, firm, and project. Analysis of data collected from China suggests that the joint venture is preferred when perceived governmental intervention or environmental uncertainty is high or host...
Cited By88
Newest
Published on Jun 1, 2019in Industrial Marketing Management4.78
Jay Weerawardena21
Estimated H-index: 21
(UQ: University of Queensland),
Sandeep Salunke4
Estimated H-index: 4
(QUT: Queensland University of Technology)
+ 2 AuthorsPeter W. Liesch23
Estimated H-index: 23
(UQ: University of Queensland)
Abstract We examine the role of learning firm-specific advantages of small and medium size (SME) service firms in their internationalization. We focus on technical services that have received limited scholarly attention. We theorize that innovative born global firms build a set of capabilities in market, internal and relational learning that will provide new knowledge configurations to undertake technical and administrative innovations. Adopting an organizational sub-system view, we posit that m...
Published on Jan 1, 2019in Journal of Innovation & Knowledge
Feng-Jyh Lin (FCU: Feng Chia University), Ching-Wei Ho (FCU: Feng Chia University)
Abstract A suitable organizational structure is necessary for companies to effectively manage foreign activities. Firms can choose from among several modes of foreign market entry, including exporting, contractual agreements, joint venturing, acquiring an existing company, and establishing a wholly owned greenfield investment from scratch. However, the majority of literature on foreign market entry mode choices has focused on large multinational enterprises. Small and medium enterprises (SMEs) w...
Published on Dec 1, 2018
Amitava Mitra15
Estimated H-index: 15
(AU: Auburn University),
Cigdem Basfirinci4
Estimated H-index: 4
This paper presents a conceptual model for evaluation of the performance of a chosen company with respect to its current benchmark organization to decide on its entry into the market. A model is formulated that integrates attributes of service quality along with the risk tolerance level of the company in question. Utilizing perceived importance of the service quality attributes from the customers’ perspective, the model proposes testing of an ordered alternative hypothesis. This approach is adop...
Published on May 22, 2018in Global Strategy Journal2.73
Douglas Dow15
Estimated H-index: 15
(University of Melbourne),
Daniel Baack14
Estimated H-index: 14
(DU: University of Denver),
Ronaldo Parente14
Estimated H-index: 14
(FIU: Florida International University)
Samuel Ato Dadzie4
Estimated H-index: 4
(Ghana Institute of Management and Public Administration),
Richard A. Owusu7
Estimated H-index: 7
(LNU: Linnaeus University)
+ 1 AuthorsAlphonse Aklamanu1
Estimated H-index: 1
(Ghana Institute of Management and Public Administration)
The objective of this study is to examine the influence of ownership, location, and internalization-specific factors, as well as strategic motives on ownership choice of foreign subsidiaries in Gha ...
Published on Apr 3, 2018in Journal of East-west Business
Nnamdi Oguji1
Estimated H-index: 1
(University of Vaasa)
ABSTRACTWhen acquiring foreign targets, multinationals have an option for partial acquisition, staged acquisition, and full acquisition. This study seeks to understand how the motives of market entry and institutions influence these acquisition strategies in foreign markets. By integrating OLI paradigm and institutional theory with an empirical case study of seven acquisitions of Finnish multinationals in global markets, the study finds that the motives of market entry (i.e., market-seeking, eff...
Published on Feb 1, 2018in Management International Review2.69
Zhi Shen2
Estimated H-index: 2
(University of Valencia),
Francisco Puig6
Estimated H-index: 6
(University of Valencia)
The entry mode and location choices are two fundamental decisions made by firms after they decide to proceed with foreign direct investment (FDI). In previous studies, these two strategic concerns have usually been studied separately as independent decisions. Following recent claims, we extend beyond the macro-environment of the host country or geographical space to study the interdependence between these two decisions by comparing the effects of two different colocation strategies on the establ...
Published on Jan 1, 2018
Abstract Small- and medium-sized enterprises (SMEs) face challenges in internationalisation due to their limited resources. Research on service firm internationalisation as well as the antecedents and consequences is scarce. Literature suggests that internationalisation for service firms is even more demanding than for manufacturing firms due to the characteristics of services such as intangibility. Extant literature states that firms introducing innovations are more likely to export. However, r...
Published on Oct 20, 2017in The International Trade Journal
Zhi Shen2
Estimated H-index: 2
(University of Valencia),
Francisco Puig6
Estimated H-index: 6
(University of Valencia),
Justin Paul10
Estimated H-index: 10
(UPR: University of Puerto Rico)
This article gives a retrospective look at the main determinants of foreign market entry modes and examines the variables and conditions used in empirical studies in this stream of research. We found that there is an “analytical context hazard” in past studies. The findings suggest: first, future research should focus on developing and extending theories with reference to strategy dimension and market/industry environment; second, the interrelationship between the main entry mode determinants sh...
Published on Oct 1, 2017in International Business Review3.64
Joon-Ho Shin1
Estimated H-index: 1
(Ramon Llull University),
Xavier Mendoza4
Estimated H-index: 4
(Ramon Llull University)
+ 1 AuthorsChang-Bum Choi4
Estimated H-index: 4
(CAU: Chung-Ang University)
This research explores the relationship between multinationality and firm performance (M-P) in the context of micro-multinational enterprises (mMNEs) within the service sector. We examine the moderating effects of industry characteristics using a data set of 1082 Spanish service mMNEs over an eight-year period. The empirical results provide statistical evidence that knowledge-intensive service mMNEs exhibit an inverted U-shaped M-P relationship, while capital-intensive service mMNEs present a U-...