This paper examines how external market factors influence the choice of international market entry (direct investment, partnership or acquisition). It is based upon interviews in four industries and upon a longitudinal two-year case study working with a major German Food company entering the British, Italian and Polish markets. The research confirms the importance of external market factors such as market growth, market consolidation and value chain fragmentation. It proposes a practical framework to guide the company's entry strategy.
Get full access to this article
View all access options for this article.
References
1.
AgarwalS. and RamaswamiS. (1992), ‘Choice of foreign market entry mode: Impact of ownership, location and internationalization factors’, Journal of International Business Studies, Vol. 23, No. 1, pp. 1–27.
2.
AndersonE. and GatignonH. (1986), ‘Modes of entry: A transaction cost analysis and propositions’, Journal of International Business Studies, Vol. 17, pp. 1–26.
3.
BarneyJ. (1991), ‘Firm resources and sustained competitive advantage’, Journal of Management, Vol. 17, No. 1, pp. 99–120.
4.
BartlettC. A. and GhoshalS. (1989), Managing Across Borders: The Transnational Solution, Boston: Harvard Business School Press.
5.
BengtssonL. (1998), ‘Corporate strategy in a small open economy: Reducing product diversification while increasing international diversification’, European Management Journal, Vol. 18, No. 4, pp. 444–53.
6.
BrouthersL. and BrouthersK. (2003), ‘Why Service and Manufacturing Entry Mode Choices Differ: The Influence of Transaction Cost Factors, Risk and Trust’, Journal of Management Studies, Vol. 40, No. 5, pp. 1179–1204.
7.
ChenH. and HuM. (2002), ‘An analysis of determinants of market entry mode and its impact on performance’, International Business Review, Vol. 11, No. 2, pp. 193–210.
8.
CollinsonS. and HouldenJ. (2005), ‘Decision making and market orientation in the internationalisation process of small and medium-sized enterprises’, Management International Review, Vol. 45, No. 4, pp. 413–36.
9.
DubinM. (1976), Foreign acquisition and the growth of multinational firms, DBA thesis, Boston: Harvard Business School.
10.
DunningJ. H. (1977), ‘Trade, location of economic activity and the MNE: A search for an eclectic approach’, In: OhlinB., The International Allocation of Economic Activity, Proceedings of a Nobel Symposium held in Stockholm, London: Macmillan.
11.
DunningJ. H. (1980), ‘Toward an eclectic theory of international production’, Journal of International Business Studies, Vol. 11, No. 1, pp. 9–31.
12.
Easterby-SmithM., ThorpeR. and LoweA. (1991), Management Research: An Introduction, London: Sage.
13.
EisenhardtK. M. (1980), ‘Building Theories from Case-Study Research’, The Academy of Management Review, Vol. 14, p. 532.
14.
EisenhardtK. M. and GraebnerM. E. (2007), Theory Building from Cases: Opportunities and Challenges, Academy of Management Journal, Vol. 50, No. 1, pp. 25–32.
15.
HalliburtonC., HünerbergR. and TöpferA. (1993), ‘Competitive Marketing Strategies in Europe’, European Management Journal, May, 20th Anniversary Issue, pp. 37–47.
16.
HarzingA. W. (2002), ‘Acquisitions versus Greenfield Investments: International Strategy and Management of Entry Modes, Strategic Management Journal, Vol. 23, pp. 211–27.
17.
HennartJ. F. and ParkY. R. (1993), ‘Greenfield vs. Acquisition: The Strategy of Japanese Investors in the United States’, Management Science, Vol. 39, No. 9, pp. 1054–69.
18.
HymerS. H. (1976), The international operations of national firms: A study of foreign direct investment, Cambridge: MIT Press.
19.
KnickerbockerF. T. (1973), Oligopolistic Reaction and the Multinational Enterprise, Harvard University Press.
20.
LiJ. and RugmanA. M. (2007), ‘Real options and the theory of foreign direct investment’, International Business Review, Vol. 16, No. 6, pp. 687–712.
21.
MostynB. (1985), ‘The Content Analysis of Qualitative Research Data: A Dynamic Approach’, In: BrennerM., BrownJ. and CanterD. (1985), The Research Interview, Uses and Approaches, London: Academic Press, pp. 115–46.
22.
PalichL. E., CardinalL. B. and MillerC. C. (2000), ‘Curvilinearity in the diversification-performance linkage: An examination of over three decades of research’, Strategic Management Journal, Vol. 21, No. 2, pp. 155–74.
23.
PinhoJ. C. (2007), ‘The impact of ownership: Location-specific advantages and managerial characteristics on SME foreign entry mode choices’, International Marketing Review, Vol. 24, No. 6, pp. 715–34.
24.
PrahaladC. K. and HamelG. (1990), ‘The core competence of the corporation’, Harvard Business Review, Vol. 68, No. 3, pp. 79–91.
25.
Sanchez-PeinadoE. and Pla-BarberJ. (2006), ‘’A multidimensional concept of uncertainty and its influence on the entry mode choice: An empirical analysis in the service sector’, International Business Review, Vol. 15, No. 3, pp. 215–32.
26.
SiggelkowN. (2007), ‘Persuasion with case studies’, Academy of Management Journal, Vol. 50, No. 1, pp. 20–24.
27.
TongT. W. and ReurJ. J. (2007), ‘Real options in multinational corporations: Organizational challenges and risk implications’, Journal of International Business Studies, Vol. 38, No. 2, pp. 215–30.
28.
TsangE. W. K. and YipP. S. L. (2007), ‘Economic Distance and the Survival of Foreign Direct Investments’, Academy of Management Journal, Vol. 50, No. 5, pp. 1156–68.
