Entry Mode Essay

8012 Words Mar 24th, 2013 33 Pages
Choice of Foreign Market Entry Mode
Cognitions from Empirical and Theoretical Studies
Xuemin Zhao and Reinhold Decker

Dr. Reinhold Decker is Professor of Marketing at the Department of Economics and Business Administration of the University of Bielefeld P. O. Box 10 01 31 D-33501 Bielefeld Germany Phone: +49-(0)521-106-6913 / 3936 Fax: +49-(0)521-106-6456 E-Mail: rdecker@wiwi.uni-bielefeld.de Xuemin Zhao is Ph.D. student of the Graduate School for Economics and Management at the University of Bielefeld (BiGSEM) P.O. Box 10 01 31 D-33501 Bielefeld Germany Phone: +49-(0)521-106-4863 Email: xzhao@wiwi.uni-bielefeld.de

Acknowledgement: We would like thank our colleagues Prof. Dr. Herbert Dawid and Prof. Dr. Stefan Wielenberg,
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2003; Nakos and Brouthers 2002; Evans 2002), CEO successor characteristics (Herrman and Datta 2002), cultural distance (Leung et al. 2003; Chen and Hu 2002; Gillespie 2002; Evans 2002; Cristina and Esteban 2002), industry barriers and firm advantages (Chen and Hennart 2002; Siripaisalpipat and Hosbino 2000), international experience (Reuber and Fisher 2003; Evans 2002; King and Tucci 2002), country risk and environmental uncertainty (Cristina and Esteban 2002), role of staffing (Konopaske et al. 2002), as well as foreign exchange rate and host country currency (Baek and Kwok 2002). All these factors can be classified into country specific factors (cultural distance, institution, exchange rate, etc.), industry specific factors (market size, market structure, industry type, etc.), firm specific factors (firm capacity, firm size, etc.) and product specific factors (product type, maturity, sales service, etc.). As to be demonstrated in the following section it is easy to see that there is no great congruence regarding which of the available models is most applicable to entry mode choice decision. As to be expected each model has its specific limitations.

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The remainder of the paper is organized as follows. In section 2 we give an overview of existing theories and models on market entry mode choice and discuss their strengths and weaknesses. Conflicting results of existing theories and empirical studies are

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