Factors influencing international fashion retailers' entry mode choice

Abstract

PurposeThe purpose of this paper is to provide a theory‐based framework that informs a fashion retailer's entry mode choice into a foreign market.Design/methodology/approachAspects of transaction cost, bargaining, resource based, and internationalization theories were integrated to develop a conceptual framework for fashion retailers determining the best entry mode to foreign markets. Propositions were developed, which serve as bridge laws, bridging the gap between the theories and the investigation of fashion retailers' entry mode choice. A case study was used to demonstrate applicability of the developed propositions.FindingsThree groups of factors were identified that influence entry mode choice in the fashion retail market: firm‐specific factors of asset specificity, brand equity, financial capacity, and international experience; country‐specific factors of country risk, cultural distance, and government restrictions; and market‐specific factors of market potential and market competition. Nine propositions were generated, positing how each of the factors may influence a fashion retailer's entry mode choice.Research limitations/implicationsThe conceptual model and propositions require further empirical investigation. Future research also needs to systematically explore the interactions or trade‐offs between different determinate factors.Practical implicationsA fashion retailer can use the framework and propositions to systematically evaluate the company's case to justify an entry mode decision for a specific foreign market.Originality/valueThis is the first paper to describe the integration of theories to help explain factors affecting fashion retailers' entry mode choice.