Determinants of EMNEs’ Entry Mode Decision with Environmental Volatility Issues: A Review and Research Agenda

Yameng Li,Ruosu Gao,Jingyi Wang

doi:10.3390/jrfm14100500

Abstract

Emerging market multinational enterprises (EMNEs) play a vital role in global economic development and usually adopt aggressive internationalization strategies. However, the volatile global environment has caused EMNEs to face various risks in their overseas expansion. To maximize the competitive advantages and achieve successful expansion, EMNEs should choose the most suitable foreign entry mode. Therefore, EMNEs need to understand what environmental factors affect their decision-making and how they influence the choice of entry modes, especially in a volatile environment. This review examines 44 selected journal articles from 1996 to June 2021 on the environmental volatility determinants of EMNEs’ entry mode choice. The entry mode choice we examined is mainly wholly-owned subsidiary versus international joint venture. We categorized the environmental volatility determinants investigated in the literature we reviewed into country-level factors (such as cross-national distance) and industry-level factors (such as industry condition). The main contributions are: (1) the review reveals three research gaps in extant studies, which are lack of research on external environmental factors, lack of research on multinationals from less concerning emerging economies, and lack of research on small-to-medium (SMEs) enterprises. (2) Practically, the study highlights the importance of understanding external environmental factors for EMNEs to make the most suitable entry mode decisions.

Highlights

Over the past two decades, emerging market multinational enterprises (EMNEs) have rapidly internationalized into both developed and developing markets (Pattnaik et al 2020), contributing to the development of the global economy
We summarized the environmental factors that influence EMNEs’ entry mode decision-making at either country-level or industry-level discussed in the existing literature and classified them into detailed categories
We reviewed and analyzed influential articles and generated several keywords in accordance with our review topic, such as “EMNE”, “emerging economy”, “entry mode”, J

Summary

Introduction

Over the past two decades, emerging market multinational enterprises (EMNEs) have rapidly internationalized into both developed and developing markets (Pattnaik et al 2020), contributing to the development of the global economy. Scholars are becoming increasingly interested in studying EMNEs’ outward foreign direct investment (FDI). Some scholars focused on the relationship between EMNEs’ international expansion and innovation capabilities (Hensmans and Liu 2018; Thakur-Wernz and Samant 2019). Liang et al (2021) reviewed relevant research on EMNEs’ strategic asset-seeking mergers and acquisitions. While Liu et al (2021) provided a literature review on the co-evolution of EMNEs. Various influencing factors of entry mode have been studied, such as the speed to enter and access the new market (Gilroy and Lukas 2006), the existence of competitors in the host country (Wang 2009), the growth of the local industry and the availability of local experience (Makino and Neupert 2000)

Objectives

Methods

Findings

Discussion

Conclusion